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Sun Pharmaceuticals Industries Ltd.

BSE: 524715 Sector: Health care
NSE: SUNPHARMA ISIN Code: INE044A01036
BSE 12:49 | 28 May 457.95 7.40
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460.60

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NSE 12:44 | 28 May 458.05 7.15
(1.59%)
OPEN

453.90

HIGH

460.75

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OPEN 455.90
PREVIOUS CLOSE 450.55
VOLUME 214694
52-Week high 504.85
52-Week low 315.20
P/E 35.17
Mkt Cap.(Rs cr) 109,876
Buy Price 457.90
Buy Qty 79.00
Sell Price 458.20
Sell Qty 61.00
OPEN 455.90
CLOSE 450.55
VOLUME 214694
52-Week high 504.85
52-Week low 315.20
P/E 35.17
Mkt Cap.(Rs cr) 109,876
Buy Price 457.90
Buy Qty 79.00
Sell Price 458.20
Sell Qty 61.00

Sun Pharmaceuticals Industries Ltd. (SUNPHARMA) - Auditors Report

Company auditors report

To the Members of

Sun Pharmaceutical Industries Limited

REPORT ON THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS

OPINION

We have audited the accompanying standalone Ind AS financial statements of SunPharmaceutical Industries Limited ("the Company") which comprise the Balancesheet as at March 31 2019 the Statement of Profit and Loss including the Statement ofOther Comprehensive Income the Cash Flow Statement and the Statement of Changes in Equityfor the year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 as amended ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019its profit including other comprehensive income its cash flows and the changes in equityfor the year ended on that date.

BASIS FOR OPINION

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing (SAs) as specified under section 143(10) of the Act.

Our responsibilities under those Standards are further described in the ‘Auditor'sResponsibilities for the Audit of the Standalone Ind AS Financial Statements' section ofour report. We are independent of the Company in accordance with the ‘Code of Ethics'issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone Ind AS financial statements.

KEY AUDIT MATTERS

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements for the financialyear ended March 31 2019. These matters were addressed in the context of our audit of thestandalone Ind AS financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. For each key audit matter belowour description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to becommunicated in our report.

We have fulfilled the responsibilities described in the ‘Auditor'sresponsibilities for the audit of the standalone Ind AS financial statements' section ofour report including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the standalone Ind AS financial statements. The results of our auditprocedures including the procedures performed to address the matters below provide thebasis for our audit opinion on the accompanying standalone Ind AS financial statements.

Key audit matter How our audit addressed the key audit matter
Litigations (as described in Note 39 of the standalone Ind AS financial statements)
The Company is involved in various legal proceedings including product liability contracts employment claims anti-trust and other regulatory matters relating to conduct of its business. Our audit procedures amongst others included the following:
• Evaluated the design and tested the operating effectiveness of controls in respect of the identification evaluation of litigations the recording/re-assessment of the related liabilities provisions and disclosures.
The Company assesses the need to make provision or to disclose a contingent liability on a case-to-case basis considering the underlying facts of each litigation.
The eventual outcome of the litigations is uncertain and estimation at balance sheet date involves extensive judgement of Management including input from legal counsel due to complexity of each litigation. Adverse outcomes could significantly impact the Company's reported profit and balance sheet position. • Obtained a list of litigations from the Company's in-house legal counsel; identified material litigations from the aforementioned list and performed inquiries with the said counsel; obtained and read the underlying documents to assess the assumptions used by management in arriving at the conclusions.
Considering the judgement involved in determining the need to make a provision or disclose as contingent liability the matter is considered a key audit matter.
• Read legal confirmations from Company's external legal counsels in respect of material litigations and considered that in our assessment.
• Read the disclosures related to provisions and contingent liabilities in the standalone Ind AS financial statements to assess consistency with underlying documents.
Tax litigations and recognition of deferred tax assets (as described in Note 9 and 39 of the standalone Ind AS financial statements)
The Company has significant tax litigations for which the Company assesses the outcome on a case-to-case basis considering the underlying facts of each tax litigation. Adverse outcomes could significantly impact the Company's reported profit and balance sheet position. Our audit procedures amongst others included the following:
• Evaluated the design and tested the operating effectiveness of controls in respect of the identification and evaluation of tax litigations/deferred tax and the recording and re-assessment of the related liabilities/assets and provisions and disclosures.
The assessment of outcome of litigations involves significant judgement which is dependent on the facts of each case supporting judicial precedents and legal opinions of external and internal legal counsels. Also recognition of deferred tax assets is a key audit matter as the assessment of its recoverability within the allowed time frame involves significant estimate of the financial projections availability of sufficient taxable income in the future and also involves significant judgements in the interpretation of tax regulations and tax positions adopted by the Company. • Engaged tax specialists to evaluate management's assessment of the outcome of these litigations.
• Our specialists considered legal precedence and other rulings in evaluating management's position on these tax litigations.
• Tested management's assumptions including forecasts and sensitivity analysis in respect of recoverability of deferred taxes on unabsorbed depreciation/carry forward losses.
• Evaluated disclosures of the tax positions tax loss carry forwards and tax litigations in the standalone Ind AS financial statements.
Merger of specified business of Sun Pharma Global FZE (as describee 1 in Note 56(11) of the standalone Ind AS financial statements)
On December 01 2018 the Company completed the demerger of the specified business of Sun Pharma Global FZE ("Sun FZE") and its merger into Sun Pharmaceutical Industries Limited. Our audit procedures amongst others included the following:
As disclosed in Note 56(11) to the standalone Ind AS financial statements the merger is accounted for as a business combination under common control. The merger has a significant impact on the standalone Ind AS financial statements of the Company including revenue profit tax reserves and comparative numbers. • Evaluated the design and tested the operating effectiveness of the controls over the accounting for business combination.
• Instructed auditors of Sun Pharma Global FZE to perform specific audit procedures in respect of carve out of assets and liabilities pertaining to specified business of Sun Pharma Global FZE as at April 01 2018 prepared by management and obtained their audit report on the carved out financial statements.
We focused on this area considering that this was a significant event during the year. • Traced the previous year (March 31 2018) restated financial information of the Company to the carve out audited financial information of Sun FZE for the year ended March 31 2018.
• Tested the exchange restatements to check mathematical accuracy.
• Read the approval obtained from National Company Law Tribunal (NCLT).
• Tested supporting workings and evidence relating to the accounting as per the terms of the scheme of arrangement.
• Evaluated the disclosures in the standalone Ind AS financial statements.

Identification and disclosures of Related Parties (as described in Not ; 51 of the standalone Ind AS financial statements)

The Company has related party transactions which include amongst others sale and purchase of goods/services to its subsidiaries associates joint ventures and other related parties and lending and borrowing to its subsidiaries associates and joint ventures. Our audit procedures amongst others included the following:
• Evaluated the design and tested the operating effectiveness of controls over identification and disclosure of related party transactions.
We focused on identification and disclosure of related parties in accordance with relevant accounting standards as a key audit matter. • Obtained a list of related parties from the Company's Management and traced the related parties to declarations given by directors where applicable and to Note 51 of the standalone Ind AS financial statements.
• Read minutes of the meetings of the Board of Directors and Audit Committee.
• Tested material creditors/debtors loan outstanding/loans taken to evaluate existence of any related party relationships; tested transactions based on declarations of related party transactions given to the Board of Directors and Audit Committee.
• Evaluated the disclosures in the standalone Ind AS financial statements for compliance with Ind AS 24.
Transition of business from Aditya Medisales Limited (as described in Note 56(12) of the standalone Ind AS financial statements)
The Company has announced transition of the Indian Domestic Formulation distribution business from Aditya Medisales Limited ("AML") a related party to a wholly owned subsidiary of the Group. As part of the transition the Company has taken back its unsold inventory lying with AML as on March 31 2019. Our audit procedures amongst others included the following:
• Evaluated the design and tested the operating effectiveness of the controls over the accounting of this transaction.
• Performed count of the physical inventory taken back from AML by the Company as at March 31 2019 on a test check basis.
We focused on this area considering that this was a significant event during the year and being a transaction with a related party.
• Tested the working for valuation of such inventory on a sample basis.
• Traced the closing receivable balance with the confirmation received from AML.
• Tested supporting workings and evidences related to accounting.
• Evaluated the disclosures in the standalone Ind AS financial statements.

OTHER INFORMATION

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe standalone Ind AS financial statements and our auditor's report thereon.

Our opinion on the standalone Ind AS 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 standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether suchother 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 thisregard.

RESPONSIBILITIES OF MANAGEMENT FOR THE STANDALONE IND AS FINANCIAL STATEMENTS

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone Ind AS financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone Ind AS financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financialreporting process.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the standalone I nd ASfinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone Ind AS financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone Ind ASfinancial 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 in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone Ind AS 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 the standalone IndAS financial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on our independenceand where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone Ind AS financialstatements for the financial year ended March 31 2019 and are therefore the key auditmatters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.

OTHER MATTER

As fully described in Note 56(11) of the standalone Ind AS financial statements theCompany has prepared these standalone Ind AS financial statements to give effect to theScheme of arrangement of demerger of the specified undertaking of Sun Pharma Global FZEinto the Company with an appointed date of April 01 2017. We did not audit total assetsof र 26758.1 million as at March 31 2018 and total revenues of र 13388.1 millionfor the year ended March 31 2018 included in the accompanying standalone Ind ASfinancial statements (as part of previous year ended March 31 2018) in respect of thespecified undertaking of Sun Pharma Global FZE whose financial statements and otherinformation has been audited by other auditor and whose report has been furnished to us.Our opinion in so far as it relates to the affairs of the specified undertaking is basedsolely on the report of other auditor. Our opinion is not modified in respect of thismatter.

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 of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure 1" 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 explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

(c) The Balance Sheet the Statement of Profit and Loss including the Statement ofOther Comprehensive Income the Cash Flow Statement and Statement of Changes in Equitydealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct;

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to these standalone Ind AS financial statementsand the operating effectiveness of such controls refer to our separate report in"Annexure 2" to this report;

(g) In our opinion the managerial remuneration for the year ended March 31 2019 hasbeen paid/provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act;

(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule

11 of the Companies (Audit and Auditors) Rules

2014 as amended in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements-Refer Note 39 to the standalone IndAS financial statements;

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts-Refer Note 25 and 29 to the standalone Ind AS financial statements;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company except a sum of र 3.2Million which is held in abeyance due to pending legal cases.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration No. : 324982E/E300003

per PAUL ALVARES

Partner

Membership No. : 105754

Place of Signature: Mumbai

Date: May 28 2019

Annexure 1 referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of our report of even date

RE: SUN PHARMACEUTICAL INDUSTRIES LIMITED (‘THE COMPANY')

i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) All fixed assets have not been physically verified by management during the yearbut there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were noticed on such verification.

(c) According to the information and explanations given by management the title deedsof immovable properties included in property plant and equipment are held in the name ofthe Company except for the following immovable properties for which registration of titledeeds is in process:

Type of asset Total number of cases Gross Block as on March 31 2019 (' Million) Net Block as on March 31 2019 (' Million) Remarks
Freehold Land including building located thereon 10 358.4 344.9 The title deeds are in the name of erstwhile companies that were merged with the Company under relevant provisions of the Companies Act 1956/2013 in terms of approval of the Honorable High Courts of respective states.
Leasehold Land 5 500.7 480.9

In respect of building where the Company is entitled to the right of occupancy and useand disclosed as property plant and equipment in the standalone Ind AS financialstatements we report that the instrument entitling the right of occupancy and use ofbuilding are in the name of the Company as at the balance sheet date.

(ii) The inventory has been physically verified by management during the year. In ouropinion the frequency of verification is reasonable. No material discrepancies werenoticed on such physical verification. Inventories lying with third parties have beenconfirmed by them and no material discrepancies were noticed in respect of suchconfirmations.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3(iii) (a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 186 of the Act in respect of loansmaking investments and providing guarantees and securities as applicable. During the yearthe Company has not granted any loans to parties covered under section 185 of the Act.

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable to the Companyand hence not commented upon.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Companies Act 2013 related to the manufacture of pharmaceuticalproducts and are of the opinion that prima facie the specified accounts and records havebeen made and maintained. We have not however made a detailed examination of the same.

(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of custom duty of excise value addedtax goods and service tax cess and other statutory dues have generally been regularlydeposited with the appropriate authorities though there has been a slight delay in a fewcases.

(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax service taxsales-tax duty of custom duty of excise value added tax goods and service tax cessand other statutory dues where applicable were outstanding at the year end for a periodof more than six months from the date they became payable.

(c) According to the records of the Company the dues of income-tax sales-tax servicetax duty of custom duty of excise value added tax goods and service tax and cesswherever applicable and which have not been deposited on account of any dispute are asfollows:

Name of the Statute Nature of dues Forum where the dispute is pending Year to which it pertains Amount (र Million)*
Income Tax Act 1961 Income Tax Interest and Penalty Commissioner (Appeals) Various years from 2007-08 to 2014-15 128.69
Income Tax Act 1961 Income Tax and Interest Income Tax Appellate Tribunal (ITAT) Various years from 1995-96 to 2011-12 17048.74
Sales Tax Act/VAT (Various States) Sales Tax Interest and Penalty Assistant / Additional /Senior Joint Commissioner Various years from 1999-00 to 2015-16 31.05
Sales Tax Act/VAT (Various States) Sales Tax Interest and Penalty Appellate Authority Various years from 1998-99 to 2015-16 14.93
Sales Tax Act/VAT (Various States) Sales Tax Interest and Penalty Tribunal Various years from 1998-99 to 2009-10 5.62
Sales Tax Act/VAT (Various States) Sales Tax Interest and Penalty High Court Various years from 1999-00 to 2010-11 51.09
The Central Excise Act 1944 Service Tax Assistant/Additional /Senior Joint Commissioner Various years from 2013-14 to 2016-17 1.40
The Central Excise Act 1944 Service Tax Customs Excise and Service Tax Appellate Tribunal (CESTAT) Delhi Various years from 2006-07 to 2015-16 52.16
The Central Excise Act 1944 Excise Duty Interest and Penalty CESTAT Various years from 2003-04 to 2015-16 1143.83
The Central Excise Act 1944 Excise Duty Interest and Penalty Commissioner (Appeals) Various years from 2003-04 to 2016-17 41.68
The Central Excise Act 1944 Excise Duty Interest and Penalty High Court Various years from 2003-04 to 2013-14 38.36
Customs Act 1962 Customs Duty Penalty and Interest CESTAT Various years from 2008-09 to 2014-15 115.97
Customs Act 1962 Customs Duty Penalty and Interest Commissioner (Appeals) Various years from 2010-11 to 2012-13 21.62

*Amount includes interest till the date of demand and are net of advances paid/adjustedunder protest.

viii) In our opinion and according to the information and explanations given bymanagement the Company has not defaulted in repayment of loans or borrowing to afinancial institution bank or Government. The Company did not have any outstanding duesto debenture holders during the year.

(ix) In our opinion and according to the information and explanations given bymanagement the Company has utilized the monies raised by way of term loans for thepurposes for which they were raised. The Company did not raise any money by way of initialpublic offer/further public offer/debt instruments.

(x) Based upon the audit procedures performed for the purpose of reporting true andfair view of the financial statements and according to the information and explanationsgiven by management we report that no fraud by the Company or no material fraud on theCompany by the officers and employees of the Company has been noticed or reported duringthe year.

(xi) According to the information and explanations given by management managerialremuneration has been paid / provided in accordance with the requisite approvals mandatedby the provisions of section 197 read with Schedule V to the Companies Act 2013.

(xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the Order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by management transactionswith the related parties are in compliance with section 177 and 188 of Companies Act 2013where applicable and the details have been disclosed in the notes to the standalone Ind ASfinancial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) of the Order are notapplicable to the Company and hence not commented upon.

(xv) According to the information and explanations given by management the Company hasnot entered into any non-cash transactions with directors or persons connected with him asreferred to in section 192 of the Act.

(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration No. : 324982E/E300003

per PAUL ALVARES

Partner

Membership No. : 105754

Place of Signature: Mumbai

Date: May 28 2019

Annexure 2 to the Independent Auditor's Report of even date on the Standalone Ind ASFinancial Statements of Sun Pharmaceutical Industries Limited

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION143 OF THE COMPANIES ACT 2013 ("THE ACT")

We have audited the internal financial controls over financial reporting of SunPharmaceutical Industries Limited ("the Company") as of March 31 2019 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date.

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting with reference to these standalone Ind AS financialstatements based on our audit. We conducted our audit in accordance with the Guidance Noteon Audit of Internal Financial Controls Over Financial Reporting (the "GuidanceNote") and the Standards on Auditing as specified under section 143(10) of the Actto the extent applicable to an audit of internal financial controls and both issued bythe Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting with reference to these standalone Ind AS financial statements was establishedand maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls over financial reporting with reference to thesestandalone Ind AS financial statements and their operating effectiveness. Our audit ofinternal financial controls over financial reporting included obtaining an understandingof internal financial controls over financial reporting with reference to these standaloneInd AS financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls over financialreporting with reference to these standalone Ind AS financial statements.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING WITH REFERENCE TO THESEFINANCIAL STATEMENTS

A company's internal financial control over financial reporting with reference to thesestandalone 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 control over financial reportingwith reference to these standalone Ind AS 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 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 financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING WITHREFERENCE TO THESE FINANCIAL STATEMENTS

Because of the inherent limitations of internal financial controls over financialreporting with reference to these standalone Ind AS financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone Ind AS financial statements to future periods are subject to the riskthat the internal financial control over financial reporting with reference to thesestandalone Ind AS financial statements may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

OPINION

In our opinion the Company has in all material respects adequate internal financialcontrols over financial reporting with reference to these standalone Ind AS financialstatements and such internal financial controls over financial reporting with reference tothese standalone Ind AS financial statements were operating effectively as at March 312019 based on the internal control over financial reporting 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.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration No. : 324982E/E300003

per PAUL ALVARES

Partner

Membership No. : 105754

Place of Signature: Mumbai

Date: May 28 2019.