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Strides Pharma Science Ltd.

BSE: 532531 Sector: Health care
NSE: STAR ISIN Code: INE939A01011
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OPEN 301.10
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VOLUME 11508
52-Week high 401.20
52-Week low 263.45
P/E 18.93
Mkt Cap.(Rs cr) 2,702
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 301.10
CLOSE 301.75
VOLUME 11508
52-Week high 401.20
52-Week low 263.45
P/E 18.93
Mkt Cap.(Rs cr) 2,702
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Strides Pharma Science Ltd. (STAR) - Auditors Report

Company auditors report

To the Members of

Strides Pharma Science Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of Strides PharmaScience Limited (the "Company") which comprise the standalone balance sheet asat 31 March 2022 and the standalone statement of profit and loss (including othercomprehensive income) standalone statement of changes in equity and standalone statementof cash flows for the year then ended and notes to the standalone financial statementsincluding a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2022and its profit and other comprehensive income changes in equity and its cash flows forthe year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor?s Responsibilities for the Audit of the StandaloneFinancial 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 thestandalone financial statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence obtained by us issufficient and appropriate to provide a basis for our opinion on the standalone financialstatements.

Emphasis of matter

1. We draw attention to Note 8 of to the standalone financialstatements which states that the ability of Stelis Biopharma Limited (‘theAssociate?) to continue as a going concern is dependent on the mitigation factorsdetailed in the said note which could have a consequential impact on the carrying amountof investment of ' 5308.55 million in the Associate as at 31 March 2022. Further theauditors of the Associate have without modifying their opinion reported a MaterialUncertainty Related to Going Concern vide their report dated 24 May 2022 on the financialinformation of the Associate for the year ended 31 March 2022. The componentauditor?s opinion on the financial information of the associate is not modified inrespect of the above matter.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

Impairment testing of investments in subsidiaries and associates:

Refer Significant Accounting Policies and note 8 to the StandaloneFinancial Statements

The key audit matter How the matter was addressed in our audit
The carrying amount of investments in subsidiaries and associates (aggregates to ' 23997.62 million) accounts for 44% of the total assets of the Company as at 31 March 2022. In view of the significance of the matter following audit procedures were applied among others to obtain sufficient audit evidence:
Company?s assessment of impairment contains a number of parameters which involve significant judgements and estimates including revenue growth cash flow forecasting weighted average cost of capital and other recent financing transactions. Changes in these assumptions including ongoing impact of COVID-19 if any could lead to an impact over fair value of investment and accordingly impairment provision. The annual impairment testing was significant to our audit because of the financial quantum of the assets as well as the involvement of critical judgements estimates and assumptions. • Tested the design of key internal financial controls and operating effectiveness of the relevant key controls around the impairment testing of the carrying value of investment in subsidiaries and associates.
We also draw attention to Note 8 of the standalone financial statements which states that the ability of Stelis Biopharma Limited (‘the Associate?) to continue as a going concern is dependent on the mitigation factors detailed in the said note which could have a consequential impact on the carrying amount of investment of ' 5308.55 million in the Associate as at 31 March 2022. Further the auditors of the Associate have without modifying their opinion reported a Material Uncertainty Related to Going Concern vide their report dated 24 May 2022 on the financial information of the Associate for the year ended 31 March 2022. • Performed a retrospective review to assess the reasonableness of Company?s projections by comparing historical forecast to actual results.
• Tested reasonability of projections used by the Company relating to the sales growth operating costs cashflow forecasts.
• Engaged our valuation specialists to assist in testing the reasonableness of the valuation by evaluating the assumptions and methodologies used by the Company in particular for weighted average cost of capital terminal growth rate etc.
• Tested recent financing transactions in these companies with third parties to determine the fair value of certain investments.
• Tested whether the Company?s analysis about the sensitivity on the outcome of impairment to possible changes in key assumptions reflect the risks inherent in the valuation including ongoing impact of COVID-19 pandemic if any .

Taxation

Refer Significant Accounting Policies and note 33 to the standalonefinancial statements

The key audit matter How the matter was addressed in our audit
The Company has investment in various subsidiaries and associates which operate across different tax jurisdictions. The Company is subjected to various domestic and foreign tax regulations with respect to taxability of income received in India including repatriation of any profits as dividends. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:
Assessing the applicability of tax and accounting of such repatriation may involve complexities with respect to various tax positions on availability of tax incentives / exemptions resulting in possible tax litigations/assessments. • We tested the design of internal financial controls and operating effectiveness of the relevant key controls in respect of taxation.;
Judgment is required in assessing the availability of tax incentives / exemptions. These judgments could change over time as each of the matter progresses with the relevant tax authorities and accordingly may impact the accounting treatment followed by the Company. • We analyzed relevant correspondences with the tax authorities; and
Given the complexities and judgement involved in assessing the availability of tax incentives / exemptions and its impact on accounting we assessed this to be an area of focus for our audit. • We used our subject matter experts to evaluate the Company?s judgment regarding their assessment of availability of tax incentives / exemptions and the accounting treatment done.
• We also considered external legal opinions and consultations made by the Company for key uncertain tax positions during current and past period.

Going Concern assessment

Refer Significant Accounting Policies to the standalone financialstatements

The key audit matter How the matter was addressed in our audit
As at 31 March 2022 the Company had net current assets position. However the group on a consolidated basis had net current liabilities (excess of current liabilities over current assets) of ' 498.44 million and the Company has a negative operating cash flows amounting to ' 2826.85 million for the year ended March 31 2022. Our audit procedures to assess the going concern assumption and whether a material uncertainty exists related to events or conditions that may cast a significant doubt on the Company?s ability to continue as a going concern included the following audit procedures to obtain sufficient appropriate audit evidence:
Note 2 to the standalone financial statements explains that Management has concluded that the going concern basis is appropriate in preparing the standalone financial statements of the Company. The Company evaluated its ability to continue as a going concern based upon an assessment of the Group?s cash position assessment of the exposure with respect to the financial guarantees provided by the Company to an associate company future cash flow forecasts its debt repayment obligations and other commitments and its availability of financing facilities after considering material breaches of its existing debt covenants and the related subsequent temporary relaxations obtained from the lenders for compliance with such debt covenants. This required the exercise of significant judgement particularly in forecasting the Group?s future revenues profitability and cash flows. • Gaining an understanding and assessing the design implementation and operating effectiveness of Group?s key internal controls over preparation of cash flow forecasts to assess its liquidity;
• Comparing the forecasted statement of profit and loss and cash flows with the Group?s business plan approved by the board of directors.
• Evaluating the key assumptions in the cash flow forecasts with reference to historical information current performance future plans and market and other external available information;
• Performing sensitivity analysis on the forecasted statement of profit and loss and cash flows by considering plausible changes to the key assumptions adopted by the Company
Based on their assessment the Company concluded that there are no material uncertainties related to events or conditions which individually or collectively may cast significant doubt on the Company?s ability to continue as a going concern. • Performing a retrospective review to assess the reasonableness of Group?s past projections by comparing historical forecasts to actual results;
Considering the significance of the area to the overall financial statements this was significant for our audit. • Assessing the availability of banking and other financing facilities by inspecting underlying documentation;
• Discussion with the parent and component Management with respect to the going concern assessment of the associate and confirming the same with the Associate?s report on the financial information received from the auditor of the Associate;
• Evaluating management?s judgment of invocation of guarantees provided to the lenders of the Associate;
• Assessing the impact of any existing covenants and the related waivers and other restrictive terms therein which may impact Group?s ability to raise further debts.
• Assessing the adequacy of the disclosures related to application of the going concern assumption.

Information Other than the Standalone Financial Statements andAuditor?s Report Thereon

The Company?s Management and Board of Directors are responsiblefor the other information. The other information comprises of Management Reports such asBoard?s Report Management Discussion and Analysis and Corporate Governance Reportbut does not include the standalone financial statements and our auditor?s reportthereon which we have obtained prior to the date of this Auditor?s Report and theremaining sections of the Company?s Annual Report which are expected to be madeavailable to us after that date.

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

In connection with our audit of the standalone financial statementsour responsibility 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 in the audit or otherwise appears to be materially misstated.

If based on the work we have performed on the other information thatwe obtained prior to the date of this Auditor?s Report 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.

When we read the other sections of the 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.

Management?s and Board of Directors? Responsibilities for theStandalone Financial Statements

The Company?s Management and Board of Directors are responsiblefor the matters stated in Section 134(5) of the Act with respect to the preparation ofthese standalone financial statements that give a true and fair view of the state ofaffairs profit/ loss and other comprehensive income changes in equity and cash flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing 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 of theaccounting 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 the Management andBoard of Directors are responsible for assessing the Company?s ability to continue asa going concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless the Board of Directors2 either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso.

The Board of Directors is also responsible for overseeing theCompany?s financial reporting process.

Auditor?s Responsibilities for the Audit of the StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor?s report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by the Management andBoard of Directors.

• Conclude on the appropriateness of the Management and Board ofDirectors use of the going concern basis of accounting in preparation of standalonefinancial statements 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 standalone 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 thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

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 standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor?s report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor?s Report) Order 2020("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

2. (A) 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 standalone balance sheet the standalone statement of profit andloss (including other comprehensive income) the standalone statement of changes in equityand the standalone statement of cash flows dealt with by this Report are in agreement withthe books of account.

d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act.

e) On the basis of the written representations received from thedirectors as on 31 March 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2022 from being appointed as a director in termsof Section 164(2) of the Act.

f) 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".

(B) With respect to the other matters to be included in theAuditor?s Report in accordance with Rule 11 of the Companies (Audit andAuditor?s) Rules 2014 in our opinion and to the best of our information andaccording to the explanations given to us:

a) The Company has disclosed the impact of pending litigations as at 31March 2022 on its financial position in its standalone financial statements - Refer Note41 to the standalone financial statements.

b) The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.

c) There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company

d) (i) The management has represented that to the best of itsknowledge and belief as disclosed in Note 50 of the standalone financial statements nofunds have been advanced or loaned or invested (either from borrowed funds or sharepremium or any other sources or kind of funds) by the Company to or in any other personsor entities including foreign entities ("Intermediaries") with theunderstanding whether recorded in writing or otherwise that the Intermediary shall:

• directly or indirectly lend or invest in other persons orentities identified in any manner whatsoever ("Ultimate Beneficiaries") by or onbehalf of the Company; or provide any guarantee security or the like to or on behalf ofthe Ultimate Beneficiaries.

(ii) The management has represented that to the best of its knowledgeand belief as disclosed in Note 50 of the standalone financial statements no funds havebeen received by the Company from any persons or entities including foreign entities("Funding Parties") with the understanding whether recorded in writing orotherwise that the Company shall:

• directly or indirectly lend or invest in other persons orentities identified in any manner whatsoever ("Ultimate Beneficiaries") by or onbehalf of the Funding Party; or

• provide any guarantee security or the like from or on behalf ofthe Ultimate Beneficiaries.

(iii) Based on such audit procedures as considered reasonable andappropriate in the circumstances nothing has come to our notice that has caused us tobelieve that the representations under sub-clause

(d) (i) and (d) (ii) contain any material mis-statement.

e) The dividend declared or paid during the year by the Company is incompliance with Section 123 of the Act.

(C) With respect to the matter to be included in the Auditor?sReport under Section 197(16) of the Act:

We refer to Note 10 of the standalone financial statements which morefully explains the decision of the Board of Directors to recover the excess remunerationpaid to the Company?s erstwhile Managing Director and Chief Executive Officer andcorresponding recoverable of ' 141.90 million recorded as at 31 March 2022. In our opinionand according to the information and explanations given to us having regard to the saidnote the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) ofthe Act which are required to be commented upon by us.

Annexure A to the Independent Auditor?s Report on StandaloneFinancial Statements

The Annexure referred to in Independent Auditor?s Report to themembers of the Company on the standalone financial statements of Strides Pharma ScienceLimited for the year ended 31 March 2022. We report that:

(i) (a) (A) The Company has maintained proper records showing fullparticulars including quantitative details and situation of Property Plant andEquipment.

(B) The Company has maintained proper records showing full particularsof intangible assets.

(b) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has a regularprogramme of physical verification of its Property Plant and Equipment by which allproperty plant and equipment are verified in a phased manner over a period of threeyears. In accordance with this programme certain property plant and equipment wereverified during the year. In our opinion this periodicity of physical verification isreasonable having regard to the size of the Company and the nature of its assets. Nomaterial discrepancies were noticed 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 (other than immovable p r o p e r t i e s where the Company is the lessee andthe leases agreements are duly executed in favour of the lessee) disclosed in thestandalone financial statements are held in the name of the Company except for thefollowing which are not held in the name of the Company

' in million

Particulars Description of item of property Gross carrying value Title deeds held in the name of: Whether title deed holder is a promoter director of relative/ director or employee of promoter/director Property held since when date Reason for not being held in the name of the company
Property plant and equipment Building 3.55 Arun Kumar Yes 5/9/1995 Note-1
Property plant and equipment Building 428.42 Shasun Pharmaceuticals Ltd. No 11/19/2015
Property plant and equipment Freehold Land 0.81 Grandix Pharmaceauticals Limited No 12/31/2009
Property plant and equipment Freehold Land 11.76 Shasun Chemicals and Drugs Ltd. No 4/1/2016 > Note-2
Property plant and equipment Freehold Land 48.69 Shasun Pharmaceuticals Ltd. No 11/19/2015
Investment property Freehold Land 22.20 Shasun Chemicals and Drugs Ltd. No 4/1/2016 J

Note-1 - The apartment is inside a housing cooperative society. TheCompany has made an application for transferring it to its name which is pending with thesociety.

Note -2 - These properties are in the name of the erstwhile Companieswhich were merged with the Company under section 391 to 394 of the Companies Act 1956 interms of the approval of the Honourable High Courts of judicature. The Company is in theprocess of transferring the title deeds of such properties in its name.

(d) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has not revaluedits Property Plant and Equipment (including Right of Use assets) or intangible assets orboth during the year.

(e) According to information and explanations given to us and on thebasis of our examination of the records of the Company there are no proceedings initiatedor pending against the Company for holding any benami property under the Prohibition ofBenami Property Transactions Act 1988 and rules made thereunder.

(ii) (a) The inventory except goods-in-transit and stocks lying withthird parties has been physically verified by the management during the year. For stockslying with third parties at the year-end written confirmations have been obtained and forgoods-in-transit subsequent evidence of receipts has been linked with inventory records.In our opinion the frequency of such verification is reasonable and procedures andcoverage as followed by management were appropriate.

No discrepancies were noticed on verification between the physicalstocks and the book records that were more than 10% in the aggregate of each class ofinventory.

(b) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has beensanctioned working capital limits in excess of five crore rupees in aggregate from banksor financial institutions on the basis of security of current assets. In our opinion thequarterly returns or statements filed by the Company with such banks or financialinstitutions are in agreement with the books of account of the Company.

(iii) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has madeinvestments provided guarantee or security granted loans and advances in the nature ofloans secured or unsecured to companies limited liability partnership and other partiesin respect of which the requisite information is as below:

(a) Based on the audit procedures carried on by us and as per theinformation and explanations given to us the Company has provided loans or providedadvances in the nature of loans or stood guarantee or provided security to any otherentity as below

Rs in million

Particulars Guarantees Security Loans Advances in nature of loans
Aggregate amount granted/ provided during the year 5244.03 - 513.88 -
- Subsidiaries 2144.03 - 463.88 -
- Joint Ventures - - - -
- Associates 3100.00 - - -
- Others - - 50.00 -
Balance outstanding as at balance sheet date in respect of above cases 20981.47 - 1289.11 -
- Subsidiaries 11561.64 - 1216.09 -
- Joint Ventures - - - -
- Associates 9419.83 - 30.00 -
- Others - - 43.02 -

(b) According to the information and explanations given to us and basedon the audit procedures conducted by us in our opinion the investments made guaranteesprovided security given during the year and the terms and conditions of the grant ofloans and advances in the nature of loans and guarantees provided during the year areprima facie not prejudicial to the interest of the Company.

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company in the case of loans given inour opinion the repayment of principal and payment of interest has been stipulated and therepayments or receipts have been regular. Further the Company has not given any advancein the nature of loan to any party during the year.

(d) According to the information and explanations given to us and onthe basis of our examination of the records of the Company there is no overdue amount formore than ninety days in respect of loans given. Further the Company has not given anyadvances in the nature of loans to any party during the year.

(e) According to the information and explanations given to us and onthe basis of our examination of the records of the Company in our opinion followinginstances of loans/advance in the nature of loan falling due during the year were renewedor extended or settled by fresh loans:

Rs in million

Name of the parties Aggregate amount dues renewed or extended or settled by fresh loans Percentage of the aggregate to the total loans or advances in the nature of loans granted during the year
Vivimed Lifesciences Private Limited (subsidiary) 801 156%

(f) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has not grantedany loans or advances in the nature of loans either repayable on demand or withoutspecifying any terms or period of repayment.

(iv) According to the information and explanations given to us and onthe basis of our examination of records of the Company in respect of investments made andloans guarantees and security given by the Company in our opinion the provisions ofSection 185 and 186 of the Companies Act 2013 ("the Act") have been compliedwith.

(v) The Company has not accepted any deposits or amounts which aredeemed to be deposits from the public. Accordingly clause 3(v) of the Order is notapplicable.

(vi) We have broadly reviewed the books of accounts maintained by theCompany pursuant to the rules prescribed by the Central Government for maintenance of costrecords under Section 148(1) of the Act in respect of its manufactured goods (and/ orservices provided by it) and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. However we have not carried out a detailedexamination of the records with a view to determine whether these are accurate orcomplete.

(vii) (a) The Company does not have liability in respect of Servicetax Duty of excise Sales tax and Value added tax during the year since effective 1 July2017 these statutory dues has been subsumed into GST.

According to the information and explanations given to us and on thebasis of our examination of the records of the Company in our opinion amounts deducted /accrued in the books of account in respect of undisputed statutory dues including Goodsand Service Tax (‘GST?) Provident fund Employees? State InsuranceIncome-Tax Duty of Customs Cess and other statutory dues have generally been regularlydeposited with the appropriate authorities. Also refer note 41 to the standalone financialstatements.

(b) According to the information and explanations given to us and onthe basis of our examination of the records of the Company no undisputed amounts payablein respect of Goods and Services Tax (‘GST?) Provident fund Employees?State Insurance Income- Tax Duty of Customs Cess and other statutory dues were inarrears as at 31 March 2022 for a period of more than six months from the date they becamepayable.

According to the information and explanations given to us and on thebasis of our examination of the records of the Company statutory dues relating to Goodsand Service Tax Provident Fund Employees State Insurance Income-Tax Duty of Customs orCess or other statutory dues which have not been deposited on account of any dispute areas follows:

Name of the statute Nature of the dues Amount (Rs In million) Period to which the amount relates Forum where dispute is pending
The Income Tax Act1961 Income tax 190.42 (net of tax paid under protest of 223.14) AY 2008-09 Income Tax Appellate Tribunal
The Income Tax Act1961 Income tax 262.20 (net of tax paid under protest of 307.56) AY 2009-10 Income Tax Appellate Tribunal
The Income Tax Act1961 Income tax 18.18 AY 2018-19 Commissioner Income tax (Appeals)
Central Excise Act1944 Central Excise 14.04 Various dates Customs Excise and Service tax Appellate Tribunal
Central Excise Act1944 Central Excise 5.20 Various dates Commissioner of Central Excise
Central Excise Act1944 Central Excise 481.20 (net of tax paid under protest of 24.51) Various dates Customs Excise and Service tax Appellate Tribunal
Central Excise Act1944 Central Excise 63.06 Various dates Commissioner of Central Tax

(viii) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has notsurrendered or disclosed any transactions previously unrecorded as income in the books ofaccount in the tax assessments under the Income Tax Act 1961 as income during the year.

(ix) a) According to the information and explanations given to us andon the basis of our examination of the records of the Company the Company has notdefaulted in repayment of loans and borrowing or in the payment of interest thereon to anylender.

(b) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has not beendeclared a wilful defaulter by any bank or financial institution or government orgovernment authority.

(c) In our opinion and according to the information and explanationsgiven to us by the management term loans were applied for the purpose for which the loanswere obtained.

(d) According to the information and explanations given to us and on anoverall examination of the balance sheet of the Company we report that no funds raised onshort-term basis have been used for long-term purposes by the Company.

(e) According to the information and explanations given to us and on anoverall examination of the standalone financial statements of the Company we report thatthe Company has not taken any funds from any entity or person on account of or to meet theobligations of its subsidiaries associates or joint ventures as defined under the Act.

(f) According to the information and explanations given to us andprocedures performed by us we report that the Company has not raised loans during theyear on the pledge of securities held in its subsidiaries joint ventures or associatecompanies.

(x) (a) The Company has not raised any moneys by way of initial publicoffer or further public offer (including debt instruments) Accordingly clause 3(x)(a) ofthe Order is not applicable.

(b) According to the information and explanations given to us and onthe basis of 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 clause 3(x)(b) of the Order is not applicable.

(xi) (a) Based on examination of the books and records of the Companyand according to the information and explanations given to us no fraud by the Company oron the Company has been noticed or reported during the course of the audit.

(b) According to the information and explanations given to us noreport under sub-section (12) of Section 143 of the Act has been filed by the auditors inForm ADT-4 as prescribed under Rule 13 of the Companies (Audit and Auditors) Rules 2014with the Central Government.

(c) As represented to us by the management there are no whistle blowercomplaints received by the Company during the year.

(xii) According to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly clause 3(xii) of the Order is not applicable.

(xiii) In our opinion and according to the information and explanationsgiven to us the transactions with related parties are in compliance with Section 177 and188 of the Act where applicable and the details of the related party transactions havebeen disclosed in the standalone financial statements as required by the applicableaccounting standards.

(xiv) (a) Based on information and explanations provided to us and ouraudit procedures in our opinion the Company has an internal audit system commensuratewith the size and nature of its business.

(b) We have considered the internal audit reports of the Company issuedtill date for the period under audit.

(xv) In our opinion and according to the information and explanationsgiven to us the Company has not entered into any non-cash transactions with its directorsor persons connected to its directors and hence provisions of Section 192 of the Act arenot applicable to the Company.

(xvi) (a) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act 1934. Accordingly clause 3(xvi)(a) of the Order isnot applicable.

(b) The Company is not required to be registered under Section 45-IA ofthe Reserve Bank of India Act 1934. Accordingly clause 3(xvi)(b) of the Order is notapplicable.

(c) The Company is not a Core Investment Company (CIC) as defined inthe regulations made by the Reserve Bank of India. Accordingly clause 3(xvi)(c) of theOrder is not applicable.

(d) The Company is not part of any group (as per the provisions of theCore Investment Companies (Reserve Bank) Directions 2016 as amended). Accordingly therequirements of clause 3(xvi)(d) are not applicable

(xvii) The Company has not incurred cash losses in the current and inthe immediately preceding financial year.

(xviii) There has been no resignation of the statutory auditors duringthe year. Accordingly clause 3(xviii) of the Order is not applicable.

(xix) We draw attention to Note 2 to the standalone financialstatements explains that Management has concluded that the going concern basis isappropriate in preparing the standalone financial statements of the Company. The Companyevaluated its ability to continue as a going concern based upon an assessment of theGroup?s cash position assessment of the exposure with respect to the financialguarantees provided by the Company to an associate company future cash flow forecastsits debt repayment obligations and other commitments and its availability of financingfacilities after considering material breaches of its existing debt covenants and therelated subsequent temporary relaxations obtained from the lenders for compliance withsuch debt covenants. This required the exercise of significant judgement particularly inforecasting the Group?s future revenues profitability and cash flows.

On the basis of the above and according to the information andexplanations given to us on the basis of the financial ratios ageing and expected datesof realisation of financial assets and payment of financial liabilities other informationaccompanying the standalone financial statements our knowledge of the Board of Directorsand management plans and based on our examination of the evidence supporting theassumptions nothing has come to our attention which causes us to believe that anymaterial uncertainty exists as on the date of the audit report that the Company is notcapable of meeting its liabilities existing at the date of balance sheet as and when theyfall due within a period of one year from the balance sheet date. We however state thatthis is not an assurance as to the future viability of the Company. We further state thatour reporting is based on the facts up to the date of the audit report and we neither giveany guarantee nor any assurance that all liabilities falling due within a period of oneyear from the balance sheet date will get discharged by the Company as and when they falldue.

(xx) In our opinion and according to the information and explanationsgiven to us there is no unspent amount under sub-section (5) of Section 135 of the Actpursuant to any project. Accordingly clause 3(xx)(a) and 3(xx)(b) of the Order are notapplicable.

Annexure B to the Independent Auditor?s report on the standalonefinancial statements of Strides Pharma Science Limited ("the Company") for theyear ended 31 March 2022.

Report on the internal financial controls with reference to theaforesaid standalone financial statements under Clause (i) of Sub-section 3 of Section 143of the Companies Act 2013

(Referred to in paragraph 2(A)(f) under ‘Report on Other Legal andRegulatory Requirements? section of our report of even date)

Opinion

We have audited the internal financial controls with reference tofinancial statements of Strides Pharma Science Limited ("the Company") as of 31March 2022 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements and such internalfinancial controls were operating effectively as at 31 March 2022 based on the internalfinancial controls with reference to financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India (the "Guidance Note").

Management?s Responsibility for Internal Financial Controls

The Company?s management and the Board of Directors areresponsible for establishing and maintaining internal financial controls based on theinternal financial controls with reference to financial statements criteria established bythe Company considering the essential components of internal control stated in theGuidance Note. These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company?spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013(hereinafter referred to as "the Act").

Auditor?s Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to financial statements based on our audit. We conductedour audit in accordance with the Guidance Note and the Standards on Auditing prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls with reference to financial statements. 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 financial statements were established and maintained and whether suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor?s judgement including the assessment ofthe risks of material misstatement of the standalone financial statements whether due tofraud 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 financial statements.

Meaning of Internal Financial controls with Reference to FinancialStatements

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 include 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 as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the Standalone financial statements.

Inherent Limitations of Internal Financial controls with Reference toFinancial Statements

Because of the inherent limitations of internal financial controls withreference 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 Standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to Standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

for B S R & Co. LLP
Chartered Accountants
Firm's Registration No.: 101248W/W-100022
Sampad Guha Thakurta
Partner
Place: Bengaluru Membership Number: 060573
Date: 24 May 2022 UDIN: 22060573AJMRCL4596

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