TO
THE MEMBERS OF
Torrent Pharmaceuticals Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the standalone financial statements of Torrent Pharmaceuticals Limited("the Company") which comprise the standalone balance sheet as at 31st March2022 and the standalone statement of profit and loss (including other comprehensiveincome) standalone statement of changes in equity and standalone statement of cash flowsfor the year then ended and notes to the standalone financial statements including asummary of significant 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 financial statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31st March 2022 and its profit and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our opinion on the standalone 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 financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
Description of Key Audit Matters
1. Impairment testing of goodwill [Refer Note 4.8.2 8 and 9 to the StandaloneFinancial Statements]
| The Key Audit Matter | How the matter was addressed in our audit |
| As disclosed in Note 4.8.2 to the standalone financial statements the Company tests goodwill for impairment annually or more frequently when there is an indication that the cash generating unit to which goodwill has been allocated may be impaired. | Our audit procedures in respect of impairment testing of goodwill included the following: |
| We identified the annual impairment assessment of goodwill as a key audit matter because the assessment process is complex and judgmental by nature and is based on assumptions on: | • Testing operating effectiveness of controls over determination of the recoverable amounts of cash generating units. Cash generating units for this purpose are those to which the goodwill is allocated; |
| – projected future cash inflows; | • Evaluating the model used in determining the value in use of the cash generating units; |
| – expected growth rate and profitability; | • Assessing the reasonableness of prior period cash flow forecasts of the Company by reference to actual performance to assess forecast accuracy; |
| – discount rate; – perpetuity value based on long term growth rate; | • Challenging the significant assumptions and judgements used in impairment analysis such as forecast revenue margins long term growth and discount rates in comparison to economic and industry forecasts with the assistance of our valuations specialist; |
| – sensitivity analyses; | • Performing sensitivity analysis of the key assumptions such as future revenue growth rates future gross margins and the discount rate used in determining the recoverable value; |
| • Evaluating the adequacy of disclosures including disclosures of key assumptions judgements and sensitivities. |
| 2. Recognition and measurement of Minimum Alternate Tax (MAT) Credit Entitlement – Deferred tax assets (Refer Note 4.13 and 22 to the Standalone Financial Statements): | |
| The Key Audit Matter | How the matter was addressed in our audit |
| The Company pays minimum alternate tax (MAT) under section 115JB of the Income Tax Act 1961. The MAT paid would be available as an offset over a period of 15 years. As disclosed in Note 22 to the Standalone Financial Statements the MAT credit is recognized as a deferred tax asset. The utilization of this asset has commenced as the Company now pays taxes under the provision of Income Tax Act 1961. The Company is required to reassess recognition of MAT credit asset at each reporting date. | In respect of MAT credit assets we assessed recognition and measurement by performing the following procedures: |
| The Company has recognized MAT credit assets based on the probability of income tax payable on future taxable profits against which such MAT credit assets can be offset before they expire. | • Evaluating the design implementation and operating effectiveness of the relevant internal controls over recognition and measurement of MAT credit assets and underlying data; |
| The recognition is based on the projected profitability. This is determined based on approved business plans. | • Obtaining the approved business plans projected profitability statements; |
| Recognition and measurement of such deferred tax assets has been identified as a key audit matter because the assessment process involves significant judgement regarding the forecasts of future income tax. The assessment process is based on assumptions affected by expected future market or economic conditions. | • Challenging the assumptions used regarding future business plans and taxable profit in light of fiscal developments current economic environment and prior performance in determining the recoverability of MAT credit assets recognized within the period available under applicable Income tax laws; |
| • Performing sensitivity analysis |
| • Testing the computation of amounts recognized as deferred tax assets on MAT credit; |
| • Focusing on the disclosures on MAT credit assets and assumptions used. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the standalone financial statements and our auditor'sreport thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's and Board of Directors' Responsibilities for the Standalone FinancialStatements
The Company's Management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under Section 133 of the Act. 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 designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring accuracy and completeness of the accounting records relevant tothe preparation and presentation of the standalone financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements the Management and Board of Directorsare responsible 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 the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
• Obtain an understanding of internal 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 with reference to financial statements in place andthe operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the Management and Board ofDirectors.
• Conclude on the appropriateness of the Management and Board of Directors use ofthe going concern basis of accounting in preparation of standalone financial statementsand based on the audit evidence obtained whether a material uncertainty exists relatedto events or conditions that may cast significant doubt on the Company's ability tocontinue as a going concern. If we conclude that a material uncertainty exists we arerequired to draw attention in our auditor's report to the related disclosures in thestandalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirement
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 givein the "Annexure A" a statement on the matters specified in paragraphs 3 and 4of 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 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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31March 2022 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2022 from being appointed as a director in terms of Section164(2) of the Act.
f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
(B) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditor's) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
a) The Company has disclosed the impact of pending litigations as at 31 March 2022 onits financial position in its standalone financial statements - Refer Note 41 to thestandalone financial statements;
b) The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
c) There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
d) (i) The management has represented that to the best of its knowledge and belief asdisclosed in note 47 to the standalone financial statements no funds have been advancedor loaned or invested (either from borrowed funds or share premium or any other sources orkind of funds) by the Company to or in any other persons or entities including foreignentities ("Intermediaries") with the understanding whether recorded in writingor otherwise that the Intermediary shall:
• directly or indirectly lend or invest in other persons or entities identified inany manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Companyor
• provide any guarantee security or the like to or on behalf of the UltimateBeneficiaries.
ii) The management has represented that to the best of its knowledge and belief asdisclosed in note 47 to the standalone financial statements no funds have been receivedby the Company from any persons or entities including foreign entities ("FundingParties") with the understanding whether recorded in writing or otherwise that theCompany shall:
• directly or indirectly lend or invest in other persons or entities identifiedin any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of theFunding Party or
• provide any guarantee security or the like from or on behalf of the UltimateBeneficiaries.
iii) Based on such audit procedures as considered reasonable and appropriate in thecircumstances nothing has come to our notice that has caused us to believe that therepresentations under sub-clause (d) (i) and (d) (ii) contain any material mis-statement.
e) i) The interim dividend declared or paid during the year by the Company until thedate of this audit report is in accordance with Section 123 of the Act.
ii) The final dividend paid by the Company during the year in respect of the samedeclared for the previous year is in accordance with Section 123 of the Act to the extentit applies to payment of dividend.
As stated in Note 48 to the financial statements the Board of Directors of the Companyhave proposed final dividend for the year which is subject to the approval of the membersat the ensuing Annual General Meeting. The dividend declared is in accordance with Section123 of the Act to the extent it applies to declaration of dividend.
(C) With respect to the matter to be included in the Auditor's Report under Section197(16) of the Act:
In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) of the Act whichare required to be commented upon by us.
Annexure - A to the Independent Auditor's Report - 31st March 2022
(Referred to in our report of even date)
(i) (a) (A) The Company has maintained proper records showing full particularsincluding quantitative details and situation of Property Plant and Equipment.
(B) The Company has maintained proper records showing full particulars of intangibleassets.
(b) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has a regular programme of physicalverification of its Property Plant and Equipment by which all property plant andequipment are verified in a phased manner over a period of three years. In accordance withthis programme certain property plant and equipment were verified during the year. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. No material discrepancies were noticedon such verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties (otherthan immovable properties where the Company is the lessee and the leases agreements areduly executed in favor of the lessee) disclosed in the standalone financial statements areheld in the name of the Company. Immovable properties of land and building whose titlehave been pledged as security for loans are held in the name of the Company.
(d) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not revalued its PropertyPlant and Equipment (including Right of Use assets) or intangible assets or both duringthe year.
(e) According to information and explanations given to us and on the basis of ourexamination of the records of the Company there are no proceedings initiated or pendingagainst the Company for holding any benami property under the Prohibition of BenamiProperty Transactions Act 1988 and rules made thereunder.
(ii) (a) The inventory has been physically verified by the management during the year.In our opinion the frequency of such verification is reasonable and procedures andcoverage as followed by management were appropriate. No discrepancies were noticed onverification between the physical stocks and the book records that were more than 10% inthe aggregate of each class of inventory.
(b) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has been sanctioned working capitallimits in excess of five crore rupees in aggregate from banks on the basis of securityof current assets. In our opinion the quarterly returns or statements filed by theCompany with such banks are in agreement with the books of account of the Company.
(iii) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not provided any security orgranted any advances in the nature of loans secured or unsecured to companies firmslimited liability partnership or any other parties during the year. The Company has madeinvestments in granted unsecured loan and provided guarantee to companies and otherparties in respect of which the requisite information is provided in clause (a) to (f) asbelow to the extent applicable. The Company has not made investments in or grantedsecured or unsecured loans or provided any guarantee to firms limited liabilitypartnerships or any other parties during the year.
(a) Based on the audit procedures carried on by us and as per the information andexplanations given to us the Company has made investments provided loans and stoodguarantee as below:
(Rs in crores)
| Particulars | Guarantees | Loans |
| Aggregate amount during the year | | |
| - Subsidiaries | 765.65 | - |
| - Others | - | 2.77 |
| Balance outstanding as at balance sheet date | | |
| - Subsidiaries | 795.97 | - |
| - Others | - | 4.36 |
(b) According to the information and explanations given to us and based on the auditprocedures conducted by us in our opinion the investments made guarantees provided andthe terms and conditions of the grant of loans and guarantees provided during the yearare prima facie not prejudicial to the interest of the Company.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company in the case of loans given in our opinion therepayment of principal and payment of interest has been stipulated and the repayments orreceipts have been regular. Further the Company has not given any advance in the natureof loan to any party during the year.
(d) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there is no overdue amount for more than ninetydays in respect of loans given. Further the Company has not given any advances in thenature of loans to any party during the year.
(e) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there is no loan or advance in the nature ofloan granted falling due during the year which has been renewed or extended or freshloans granted to settle the overdues of existing loans given to same parties.
(f) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not granted any loans oradvances in the nature of loans either repayable on demand or without specifying any termsor period of repayment.
(iv) In our opinion and according to the information and explanations given to us andon the basis of our examination of the records of the Company the Company has not grantedany loans or provided any guarantees or security as specified under Section 185 of theAct during the year. The Company has complied with the provisions of Section 186 of theAct in respect of investments made or guarantees provided to the parties covered underSection 186 of the Act. The Company has not granted any loans or provided any security tothe parties covered under Section 186 of the Act.
(v) The Company has not accepted any deposits or amounts which are deemed to bedeposits from the public. Accordingly clause 3(v) of the Order is not applicable.
(vi) We have broadly reviewed the books of accounts maintained by the Company pursuantto the rules prescribed by the Central Government for maintenance of cost records underSection 148(1) of the Act in respect of its manufactured goods and are of the opinion thatprima facie the prescribed accounts and records have been made and maintained. Howeverwe have not carried out a detailed examination of the records with a view to determinewhether these are accurate or complete.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company in our opinion the amountsdeducted/accrued in the books of account in respect of undisputed statutory dues includingGoods and Service Tax (GST) Provident Fund Employees' State Insurance Income-Tax Dutyof Customs Cess and other material statutory dues as applicable have generally beenregularly deposited during the year by the Company with the appropriate authorities.
According to the information and explanations given to us and on the basis of ourexamination of the records of the Company no undisputed amounts payable in respect ofGoods and Service Tax Provident Fund Employees' State Insurance Income-Tax Duty ofCustoms Cess and other material statutory dues as applicable were in arrears as at 31March 2022 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company statutory dues relating to Goods and ServiceTax (GST) Provident Fund Employees' State Insurance Income-Tax Duty of Customs orCess Sales Tax Excise Duty Service Tax Value Added Tax or other material statutorydues which have not been deposited on account of any dispute are reported under EnclosureI to this report.
(viii) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the Company has not surrendered ordisclosed any transactions previously unrecorded as income in the books of account inthe tax assessments under the Income Tax Act 1961 as income during the year.
(ix) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the Company has not defaulted in repaymentof loans and borrowing or in the payment of interest thereon to any lender. Further loansamounting to Rs 399.97 Crores as at 31st March 2022 are repayable on demand and terms andconditions for payment of interest thereon have not been stipulated. According to theinformation and explanations given to us such loans and interest thereon have not beendemanded for repayment during the relevant financial year.
(b) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not been declared a willfuldefaulter by any bank or financial institution or government or government authority.
(c) According to the information and explanations given to us by the management theCompany has not obtained any term loans during the year. Accordingly clause 3(ix)(c) ofthe Order is not applicable.
(d) According to the information and explanations given to us and on an overallexamination 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 an overallexamination of the standalone financial statements of the Company we report that theCompany has not taken any funds from any entity or person on account of or to meet theobligations of its subsidiaries (as defined under the Act.)
(f) According to the information and explanations given to us and procedures performedby us we report that the Company has not raised loans during the year on the pledge ofsecurities held in its subsidiaries (as defined under the Act.)
(x) (a) The Company has not raised any moneys by way of initial public offer or furtherpublic offer (including debt instruments) Accordingly clause 3(x)(a) of the Order is notapplicable.
(b) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly clause 3(x)(b) of the Order is not applicable.
(xi) (a) Based on examination of the books and records of the Company and according tothe information and explanations given to us considering the principles of materialityoutlined in Standards on Auditing we report that no fraud by the Company or on theCompany has been noticed or reported during the course of the audit.
(b) According to the information and explanations given to us no report undersub-section (12) of Section 143 of the Act has been filed by the auditors in Form ADT-4 asprescribed under Rule 13 of the Companies (Audit and Auditors) Rules 2014 with theCentral Government.
(c) We have taken into consideration the whistle blower complaints received by theCompany during the year while determining the nature timing and extent of our auditprocedures.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company as prescribed under section 406 of the Act. Accordinglyparagraphs 3(xii)(a) 3(xii)(b) and 3(xii)(c) of the Order are not applicable to theCompany.
(xiii) In our opinion and according to the information and explanations given to usthe transactions with related parties are in compliance with Section 177 and 188 of theAct where applicable and the details of the related party transactions have beendisclosed in the standalone financial statements as required by the applicable accountingstandards.
(xiv) (a) Based on information and explanations provided to us and our auditprocedures in our opinion the Company has an internal audit system commensurate with thesize and nature of its business.
(b) We have considered the internal audit reports of the Company issued till date forthe period under audit.
(xv) In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transactions with its directors or personsconnected to its directors and hence provisions of Section 192 of the Act are notapplicable to the Company.
(xvi) (a) & (b) In our opinion and according to the information and explanationsgiven to us the Company is not required to be registered under Section 45-IA of theReserve Bank of India Act 1934. Accordingly paragraph 3(xvi)(a) and 3(xvi)(b) of theOrder is not applicable to the Company.
(c) The Company is not a Core Investment Company (CIC) as defined in the regulationsmade by the Reserve Bank of India. Accordingly clause 3(xvi)(c) of the Order is notapplicable.
(d) According to the information and explanations provided to us the Group (as per theprovisions of the Core Investment Companies (Reserve Bank) Directions 2016) does not havemore than one CIC.
(xvii) The Company has not incurred cash losses in the current and in the immediatelypreceding financial year.
(xviii) There has been no resignation of the statutory auditors during the year.Accordingly clause 3(xviii) of the Order is not applicable.
(xix) According to the information and explanations given to us and on the basis of thefinancial ratios ageing and expected dates of realisation of financial assets and paymentof financial liabilities other information accompanying the standalone financialstatements our knowledge of the Board of Directors and management plans and based on ourexamination of the evidence supporting the assumptions nothing has come to our attentionwhich causes us to believe that any material uncertainty exists as on the date of theaudit report that the Company is not capable of meeting its liabilities existing at thedate of balance sheet as and when they fall due within a period of one year from thebalance sheet date. We however state that this is not an assurance as to the futureviability of the Company. We further state that our reporting is based on the facts up tothe date of the audit report and we neither give any guarantee nor any assurance that allliabilities falling due within a period of one year from the balance sheet date will getdischarged by the Company as and when they fall due.
(xx) (a) In our opinion and according to the information and explanations given to usthere is no unspent amount under sub section (5) of Section 135 of the Act pursuant to anyproject other than ongoing projects. Accordingly clause 3(xx)(a) of the Order is notapplicable.
(b) Based on information and explanations provided to us in respect of ongoingprojects the Company through its implementing agency has transferred the unspent amountto a Special Account within a period of 30 days from the end of the financial year incompliance with Section 135(6) of the said Act except in respect of the following:
(Rs in crores)
| Financial year* | Amount to be spent in accordance with section 135(5) | Amount remaining unspent as at the year-end to be transferred special account u/s 135(6) | Amount transferred to Special Bank Account u/s 135(6) within 30 days from end of financial year (or till the date of audit report if that is earlier) | Amount transferred to Special Bank Account u/s 135(6) after a period of 30 days from end of financial year (till the date of audit report) | Amount not transferred to Special Bank Account u/s 135(6) till the date of audit report |
| (a) | (b) | (c) | (d) | (e) | (f) |
| 2020-21 | 21.54 | 7.29 | - | 5.09* | - |
*This represents unspent amount deposited by implementing agency on behalf of theCompany on 30th September 2021 and balance of Rs 2.20 crores were utilized byimplementing agency for ongoing projects prior to the date of deposit.
Enclosure I
| Name of the Statute | Nature of Dues | Forum where dispute is pending | Period to which the amount relates | Amount involved (Rs in crores) | Amount unpaid (Rs in crores) |
| The Central Excise Act 1944 | Cenvat Credit/Input service tax/demand of duty & penalty | CESTAT- Kolkata | 2011-12 | 2.69 | 2.64 |
| Finance Act 1994 | Demand of Service Tax/ Interest/Penalty | CESTAT- Ahmedabad | 2013-14 to 2015-16 | 6.40 | 6.40 |
| Finance Act 1994 | Demand of Service Tax/ Interest/Penalty | Supreme Court of India | 2007-08 to June 2012 | 59.25 | 59.25 |
| Finance Act 1994 | Demand of Service Tax/ Interest/Penalty | Commissioner of GST & Central Excise- Ahmedabad | July -2012 to Sept 2013 October-2013 to March-2015 | 11.21 | 11.21 |
| The Central Excise Act 1944 | Cenvat Credit/Input service tax/demand of duty & penalty | CESTAT- Ahmedabad | 2012-13 and 201314 | 12.43 | 12.13 |
| The Central Goods & Services Tax Act2017 | Interest on Input tax credit refund recovery | Gujarat High Court | July & August 2017 | 4.04 | 4.04 |
| The Central Excise Act 1944 | Cenvat Credit/Input service tax/demand of duty & penalty | Dy. Commr. of CGST & Central ExciseKalol | 2005-06 | 0.05 | 0.03 |
| The Central Excise Act 1944 | Cenvat Credit/Input service tax/demand of duty & penalty | Dy. Commr. of CGST & Central ExciseKalol | 2013-14 & 2014-15 | 0.19 | 0.19 |
| The Central Goods & Services Tax Act2017 | Cenvat Credit/ Interest & penalty | Joint Commissioner- CGST & Central Excise Siliguri | 2016-17 to June-2017 | 3.82 | 3.66 |
| The Central Goods & Services Tax Act2017 | Input Tax Credit | CESTAT-Ahmedabad | 2017-18 | 0.67 | 0.65 |
| Madhya Pradesh Vat Act2002 | Demand of Tax | Assistant Commissioner of Commercial Tax Madhya Pradesh | 2014-152015-16 and 2016-17 | 0.06 | 0.04 |
| Madhya Pradesh Entry Tax Act 1976 | Demand of Entry Tax | Assistant Commissioner of Commercial Tax Madhya Pradesh | 2015-16 and 201617 | 0.15 | 0.13 |
| Uttar Pradesh Trade Tax Act 1948 | Demand of Tax | Joint Commissioner Commercial Tax Uttar Pradesh | 2003-04 and 200506 | 0.41 | 0.33 |
| West Bengal Value Added Tax Act 2003 | Demand of Tax | West Bengal Taxation Tribunal | 2008-09 & 2015-16 | 2.42 | 2.42 |
| Andhra Pradesh Value Added Tax Act 2005 | Demand of Tax | Commercial Tax Officer | 2015-16 | 0.08 | 0.08 |
| Kerala Value Added Tax Act 2003 | Demand of Tax | Asst / Jt. Commissioner of Commercial Tax | 2007-08 & 2015-16 | 0.30 | 0.22 |
| Jharkhand Value Added Tax Act 2005 | Demand of Tax | Asst Commissioner of Commercial Tax | 2015-16 | 0.03 | 0.03 |
| Employees' State Insurance Act 1948 | Contribution towards ESI | High Court Gujarat | November 1991 - March 2022 | 15.50 | 15.50 |
Annexure - B to the Independent Auditor's Report on Standalone financial statements ofTorrent Pharmaceuticals Limited for the year ended 31st March 2022
Report on the Internal Financial Controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013.
(Referred to in paragraph 2(A)(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)
Opinion
We have audited the internal financial controls with reference to financial statementsof Torrent Pharmaceuticals Limited (‘the Company') as of 31st March 2022 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31st March 2022 based on the internal financial controlswith reference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").
Management's Responsibility for Internal Financial Controls
The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (‘the Act').
Auditor's Responsibility
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. 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 with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to financial statements.
Meaning of Internal Financial Controls with Reference to Financial Statements
A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles.
A company's internal financial controls with reference to financial statements includethose policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the standalone financial statements.
Inherent Limitations of Internal Financial Controls with Reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to standalone financial statements to future periods are subject to the riskthat the internal financial controls with reference to standalone financial statements maybecome inadequate because of changes in conditions or that the degree of compliance withthe policies or procedures may deteriorate.
| Place: Mumbai | For B S R & Co. LLP Chartered Accountants Firm's Registration No. 101248W/W-100022 Jamil Khatri |
| Date: 25th May 2022 | Partner |
| Membership Number: 102527 UDIN:22102527AJNWTT6657 |
