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Strides Pharma Science Ltd.

BSE: 532531 Sector: Health care
NSE: STAR ISIN Code: INE939A01011
BSE 12:30 | 20 Mar 439.85 -8.15
(-1.82%)
OPEN

447.00

HIGH

452.80

LOW

439.15

NSE 12:24 | 20 Mar 440.90 -7.60
(-1.69%)
OPEN

450.00

HIGH

452.70

LOW

438.50

OPEN 447.00
PREVIOUS CLOSE 448.00
VOLUME 45614
52-Week high 696.57
52-Week low 334.10
P/E 4.94
Mkt Cap.(Rs cr) 3,939
Buy Price 439.90
Buy Qty 447.00
Sell Price 440.55
Sell Qty 96.00
OPEN 447.00
CLOSE 448.00
VOLUME 45614
52-Week high 696.57
52-Week low 334.10
P/E 4.94
Mkt Cap.(Rs cr) 3,939
Buy Price 439.90
Buy Qty 447.00
Sell Price 440.55
Sell Qty 96.00

Strides Pharma Science Ltd. (STAR) - Auditors Report

Company auditors report

To the Members of Strides Shasun Limited

Report on the Audit of the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statementsof Strides Shasun Limited ("the Company") which comprise the Balance Sheet asat 31 March 2018 the Statement of Profit and Loss the Statement of Changes in Equity andthe Statement of Cash Flows for the year then ended and summary of the significantaccounting policies and other explanatory information.

Management's Responsibility for the Standalone Ind AS FinancialStatements

The Company's Board of Directors is responsible for the matters statedin Section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone Ind AS financial statements that give a true and fair viewof the state of affairs profit and other comprehensive income changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards (Ind AS) prescribed under section 133 ofthe Act.

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 standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

In preparing the standalone Ind AS financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone Ind ASfinancial statements based on our audit.

We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone Ind AS financial statements inaccordance with the Standards on Auditing specified under Section 143(10) of the Act.Those Standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the standalone Ind AS financialstatements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence aboutthe amounts and the disclosures in the standalone Ind AS financial statements. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the standalone Ind AS financial statements whether dueto fraud or error. In making those risk assessments the auditor considers internalfinancial controls relevant to the Company's preparation of the standalone Ind ASfinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the standalone Ind AS financial statements.

We are also responsible to conclude on the appropriateness ofmanagement's use of the going concern basis of accounting and based on the auditevidence obtained whether a material uncertainty exists related to events or conditionsthat may cast significant doubt on the entity's ability to continue as a goingconcern. If we conclude that a material uncertainty exists we are required to drawattention in the auditor's report to the related disclosures in the financialstatements or if such disclosures are inadequate to modify the opinion. Our conclusionsare based on the audit evidence obtained up to the date of the auditor's report.However future events or conditions may cause an entity to cease to continue as a goingconcern.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone Ind AS financialstatements.

Opinion

In our opinion and to the best of our information and according to theexplanations given to us read with the note on accounting for Demerger as described insub-paragraph (2) of the Emphasis of Matter paragraph below the aforesaid standalone IndAS financial statements give the information required by the Act in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs of the Company as at 31 March 2018 its profitand other comprehensive income changes in equity and its cash flows for the year ended onthat date.

Emphasis of matter

1. We draw attention to Note 39.1 to the standalone Ind AS financialstatements regarding the notification of claims received from Mylan under the terms of theShare Purchase Agreements (SPAs) for sale of the investments in entities in theSpecialties products business in an earlier year which the Company had disputed. Asstated in the Note the Company has provided a guarantee in favour of Mylan and certainamounts have been set aside in escrows under the terms of the SPAs. As further explainedin the aforesaid Note given the nature of the pending claims against the Company andconsidering the amount held in escrow account the Company believes that any furtheroutflow of resources is not probable.

2. We draw attention to Note 39.2 to the standalone Ind AS financialstatements regarding the Demerger Scheme (Scheme) which has been approved by NationalCompany Law Tribunal (NCLT) vide its order dated 9 March 2018 and filed with the Registrarof Companies on 31 March 2018. In accordance with the Scheme approved by NCLT the Companyhas given effect to the Scheme from the appointed date specified therein i.e. 1 October2017 instead of the effective date.

Our opinion is not modified in respect of these matters.

Other matters

Corresponding figures for the year ended 31 March 2017 have beenaudited by another auditor who expressed an unmodified opinion dated 18 May 2017 on thestandalone Ind AS financial statements of the Company for the year ended 31 March 2017.

Our opinion on the standalone Ind AS financial statements is notmodified in respect of the above matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government in terms of Section 143(11) ofthe Act we give in "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order.

2. 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 have beenkept by the Company so far as it appears from our examination of those books;

c) The Balance Sheet the Statement of Profit and Loss the Cash FlowStatement and Statement of Changes in Equity dealt with by this report are in agreementwith the books of account;

d) In our opinion the aforesaid standalone Ind AS financialstatements read with Note 39.2 therein and sub-paragraph (2) of the Emphasis of Matterparagraph above comply with the Indian Accounting Standards prescribed under section 133of the Act.

e) In our opinion any unfavourable outcome with regard to the matterreferred to in Note 39.1 to the standalone Ind AS financial statements resulting inoutflow of resources significantly in excess of amounts set aside in escrows stated inthe said Note may have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from thedirectors as on 31 March 2018 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2018 from being appointed as a director in termsof Section 164(2) of the Act;

g) With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B"; and

h) 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 standalone Ind AS financial statements - Refer Note 39.1 and 42to the standalone Ind AS financial statements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses - Refer Note 54to the standalone Ind AS financial statements;

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company; and

iv. The disclosures in the standalone Ind AS financial statementsregarding holdings as well as dealings in specified bank notes during the period from 8November 2016 to 30 December 2016 have not been made since they do not pertain to thefinancial year ended 31 March 2018. However amounts as appearing in the audited StandaloneInd AS financial statements for the period ended 31 March 2017 have been disclosed.

for B S R & Co. LLP
Chartered Accountants
Firm Registration Number: 101248W/W-100022
Sampad Guha Thakurta
Partner
Bengaluru May 18 2018 Membership Number: 060573

Annexure - A to the Independent Auditor's Report

The Annexure referred to in Independent Auditor's Report to themembers of the Company on the standalone Ind AS financial statements of Strides ShasunLimited for the year ended 31 March 2018. We report that:

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of itsfixed assets by which all fixed assets are verified in a phased manner over a period ofthree years. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature of its assets. In accordance withthis programme certain fixed assets were verified during the year and no materialdiscrepancies were noticed on such verification.

(c) According to the information and explanations given to us and basisour examination of the records of the Company the title deeds of immovable properties areheld in the name of the Company except the following:

Gross block Net Block
Particulars of land and building Rs. ( in million as at 31 March 2018) Rs. ( in million as at 31 March 2018) Remarks
Freehold land admeasuring 5.44 Acres 201.42 201.42 The title deeds are under dispute.
Freehold land and building admeasuring 20.43 acres 630.69 468.96 The title deeds are not in the name of the Company.
Freehold land admeasuring 0.6 Acres 0.81 0.81 The title deeds are not in the name of the Company.
Building admeasuring 750 sq. ft. 3.55 1.28 The title deeds are not in the name of the Company.

In respect of immovable properties of land and buildings that have beentaken on lease and disclosed as fixed asset in the financial statements the leaseagreements are in the name of the Company where the Company is the lessee in theagreement.

(ii) Inventories apart from goods in transit and inventories lying withthird parties have been physically verified by the Management during the year and thediscrepancies noticed on such verification between the physical stock and book recordswere not material. In our opinion the frequency of such verification is reasonable.

(iii) The Company has granted unsecured loans to Companies covered inthe register maintained under Section 189 of the Companies Act 2013 (‘theAct').

(a) During the current year the Company has not granted loans to thecompanies listed in the register maintained under Section 189 of the Act. Accordinglyparagraph 3 (iii) (a) of the Order is not applicable to the Company.

(b) In the case of the loans granted in the earlier years which arecovered in the register maintained under Section 189 of the Act the borrower has beenregular in the payment of the principal and interest as stipulated.

(c) There are no overdue amounts in respect of the loans granted tocompanies in the earlier years which are covered in the register maintained under Section189 of the Act.

(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Section 185 and 186 of theAct with respect to the loans given investments made and guarantees and securitiesgiven.

(v) According to information and explanations given to us the Companyhas not accepted any deposits. Accordingly paragraph 3(v) of the Order is not applicableto the Company.

(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the

Companies (Cost Records and Audit) Rules 2014 as amended prescribedby the Central Government under Section 148 of the Act and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. However we havenot made a detailed examination of such records.

(vii) (a) According to the information and explanations given to us andon the basis of our examination of the records of the Company amounts deducted / accruedin the books of account in respect of undisputed statutory dues including provident fundemployees' state insurance income-tax sales tax service tax duty of customs dutyof excise value added tax goods and service tax cess and other material statutory dueshave been generally regularly deposited during the year with the appropriate authorities.

According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome tax sales tax service tax duty of customs duty of excise value added taxgoods and service tax cess and other material statutory dues were in arrears as at 31March 2018 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us thereare no dues of income tax sales tax service tax duty of customs duty of excise valueadded tax and goods and service tax which have not been deposited with the appropriateauthorities on account of any disputes other than those set out below:

Name of statute Nature of dues Forum where dispute is pending Period to which the amount relates in million) Amount (Rs.
The Income-Tax Act 1961 Income tax Income Tax Appellate Tribunal AY 2008-09 190.42 (net of tax paid under protest of 223.14)
The Income-Tax Act 1961 Income tax Income Tax Appellate Tribunal AY 2009-10 250.60 (net of tax paid under protest of 307.56)
The Income-Tax Act 1961 Income tax Income Tax Appellate Tribunal AY 2011-12 75.14 (net of tax paid under protest of 59.98)
Central Excise Act 1944 Central excise CCE (Appeals) Various dates 3.59
Central Excise Act 1944 Central excise Customs Excise and Service Tax Appellate Tribunal Various dates 481.20 (net of tax paid under protest of 24.51)
The Finance Act 1994 Service tax Customs Excise and Service Tax Appellate Tribunal Various dates 48.17 (net of tax paid under protest of 0.35)
Maharashtra Value Added Tax Act 2002 Maharashtra VAT Joint Commissioner (Appeals) 2010-11 32.10
Karnataka Value Added Tax Act 2005 Karnataka VAT High Court 2013-14 42.23
Karnataka Value Added Tax Act 2005 Karnataka VAT Deputy Commissioner of Commercial Tax 2011-12 65.34

(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in repayment of dues to banks and financialinstitutions. The Company did not have any borrowings during the year by way of debenturesor from government.

(ix) According to the information and explanations given to us theCompany has not raised any money by way of public issue or further public offer (includingdebt instruments) during the year. The term loans raised by the Company have been appliedfor the purpose for which they were raised.

(x) According to the information and explanations given to us no fraudby the Company or any material fraud on the Company by its officers or employees has beennoticed or reported during the year.

(xi) According to the information and explanations given to us andbased on our examination of the records the Company has paid remuneration of Rs. 51.66million to the managing director for the year ended 31 March 2018 which is in excess byRs. 1.67 million of the limits prescribed by Section 197 read with Schedule V of the Act.The Company has reported this excess amount as recoverable from the directors as at 31March 2018.

(xii) In our opinion and according to the information and explanationsgiven to us the Company is not a nidhi company. Accordingly paragraph 3(xii) of theOrder is not applicable.

(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with Sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the standalone Ind AS financialstatements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly para 3 (xiv) of the Order is not applicable.

(xv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him.

(xvi) According to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.

for B S R & Co. LLP
Chartered Accountants
Firm Registration Number: 101248W/W-100022
Sampad Guha Thakurta
Partner
Bengaluru May 18 2018 Membership Number: 060573

Annexure - B to the Independent Auditor's Report of even date onthe standalone financial statements of Strides Shasun Limited

Report on the Internal Financial Controls with reference to thestandalone Ind AS financial statements under Clause (i) of Sub-section 3 of Section 143 ofthe Companies Act 2013 ("the Act")

We have audited the internal financial controls with reference to thestandalone Ind AS financial statements of Strides Shasun Limited (‘theCompany') as of 31 March 2018 in conjunction with our audit of the standalone Ind ASfinancial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal controls with reference tothe standalone Ind AS financial statements criteria established by the Company consideringthe essential components of internal controls stated in the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting (the "Guidance Note")issued by the Institute of Chartered Accountants of India (‘ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancialcontrolsthatwereoperatingeffectivelyforensuring the orderly and efficient conductof its business including adherence to Company's policies the safeguarding of itsassets the prevention and detection of frauds and errors the accuracy and completenessof the accounting records and the timely preparation of reliable financial informationas required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to the standalone Ind AS financial statements based onour audit. We conducted our audit in accordance with the Guidance Note and the Standardson Auditing issued by ICAI and deemed to be prescribed under Section 143(10) of the Actto the extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to the standalone Ind AS financial statements was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system with reference to the standaloneInd AS financial statements and their operating effectiveness. Our audit of internalfinancial controls with reference to the standalone Ind AS financial statements includedobtaining an understanding of internal financial controls with reference to the standaloneInd AS financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal controls basedon the assessed risk. The procedures selected depend on the auditor's judgmentincluding the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls with reference to the standalone Ind AS financial statements.

Meaning of Internal Financial Controls with reference to the StandaloneInd AS Financial Statements

A company's internal financial controls with reference to thestandalone Ind AS financial statements is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial controls with reference to thestandalone Ind AS financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the Ind ASfinancial statements.

Inherent Limitations of Internal Financial Controls with reference tothe Standalone Ind AS Financial Statements

Because of the inherent limitations of internal financial controls withreference to the standalone Ind AS financial statements 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 theinternal financial controls with reference to the standalone Ind AS financial statementsto future periods are subject to the risk that the internal financial controls withreference to the standalone Ind AS financial statements may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls with reference to the standalone Ind AS financial statementsand internal financial controls with reference to the standalone Ind AS financialstatements were operating effectively as at 31 March 2018 based on the internal financialcontrols with reference to the standalone Ind AS financial statements criteria establishedby the Company considering the essential components of internal controls stated in theGuidance Note issued by the ICAI.

for B S R & Co. LLP
Chartered Accountants
Firm Registration Number: 101248W/W-100022
Sampad Guha Thakurta
Partner
Bengaluru May 18 2018 Membership Number: 060573