TRANSGENE BIOTEK LIMITED
Report on the Audit of Standalone Ind AS Financial Statements
We have audited the accompanying Standalone Ind AS financial statementsof M/ s.Transgene Biotek Limited ("The Company") which comprise the BalanceSheet as at 31st March 2020 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 ended and a summary of the significant accounting policies and otherexplanatory information(herein after referred to as" standalone Ind AS financialstatements"). In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Standalone Ind AS Financial Statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India including the IndAS of the financial position of the Company as at 31March 2020 and its financialperformance including other comprehensive income its cash flows and changes in equity 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 thoseStandards are further described in the Auditor's responsibilities for the audit ofthe Standalone financial statements section of our report. We are independent of the Groupin accordance with the ethical requirements that are relevant to our audit of theStandalone financial statements in India in terms of the Code of Ethics issued by ICAI andthe relevant provisions of the Act and we have fulfilled our other ethicalresponsibilities in accordance with these requirements. We believe that the audit evidencewe have obtained is sufficient and appropriate to provide a basis for our opinion.
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. We have determined the matters described below to bethe Key Audit Matters to be communicated in our report.
|The Key Audit Matters ||How our Audit addressed the key audit matter |
|SEBI ENQUIRY & ITS STATUS ||Principal Audit procedures performed: |
|Securities and Exchange Board of India (SEBI) had conducted preliminary inquiry on receiving certain complaints on the matter of GDRs issued by the Company and its utilization thereof basically on the angle of protection of Investors' interest. SEBI prima facie conducted that the GDR proceeds have been transferred by the Company directly or indirectly through foreign subsidiary for undisclosed purposes under the garb of consideration for technology transfer and consequently passed an interim order inter alia retraining the Company from issuing any securities. The Company has appealed against the said order. || The documents made available to us the management is seriously pursuing to recover GDR money. In this process they have appointed Lawyers internationally wherever the alleged parties involved in GDR scam are present. The case is forwarding in good speed. |
|The findings of the SEBI as per their order on the utilization/transfer of GDR proceeds for undisclosed purposes point out towards violations of the provisions of the provisions of the Foreign Exchange Management Act as well as GDR approval conditions the impact of which we are unable to quantify at this stage. || Further on August 28th 2020 SEBI has issued its final order against Ref No WTM/AB/EFD-1/DRA-4/18/2020- 20 confirming its ban on the company to access Securities Market in what so ever manner. Also it directed the company to recover GDR proceeds through its ongoing various measures within one year from the date of its order. |
|GDR Issue: || |
|There is an outstanding balance of Rs.2302.00 lakhs which pertains to advance given to a party out of the proceeds of GDR. The contention of the management is that the payments were made without Company's authorization or knowledge the same was submitted to SEBI during their investigations. However the Management as a prudent measure made full provision for the amount in the Books of Account considering the facts. || The company has been trying to recover this amount along with GDR proceeds from various parties as discussed above. |
| || In our Audit procedure we have verified the documents as relating the case and its advancement and assessed management's claim on the same. |
| || However we are unable to opine whether this amount is recoverable or not as we are unable to obtain confirmation from the concerned party. |
|INVESTMENTS: || |
|Under the head Investment an amount of Rs. 9220.10 Lakhs is made in Wholly owned subsidiary company viz. Transgene Biotek HK Limited. ||In the absence of alternative methodologies to independently evaluate the same we are unable to express an opinion whether the said sum as reflected under the above head is recoverable at the value at which it is stated. |
|As the subsidiary is not in operations the books of accounts have not been audited since many years along with FY 2020-20. As this amount may not be recoverable as a prudent measure management made full provision in the books of account considering the above development. || |
Information Other than the Standalone Financial Statements andAuditor's report thereon
The Company's Board of Directors is responsible for thepreparation of the other information.
The other information comprises the information included in ManagementDiscussion and Analysis Board's Report including annexure thereto BusinessResponsibility Report Governance and shareholder's information but does not includethe standalone financial statements and our auditor's report thereon.
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. Ifbased on the work we have performed and the reports of the other auditors as furnished tous we conclude that there is a material misstatement of this other information; we arerequired to report that fact. We have nothing to report in this regard.
Management's responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the
Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the companyin accordance with the Ind AS and other accounting principles generally accepted in India.This responsibility also include maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding 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 the design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring 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 management isresponsible for assessing the company ability to continue as a going concern disclosingas applicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the company'sfinancial reporting process.
Auditor's responsibilities for the audit of the Standalone Financialstatements
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 the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theHolding 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 management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theability of the Group 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 Group 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.
Materiality is the Magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably Knowledgeable user of the financial statements may beinfluenced We consider quantitative materiality and qualitative matters in
(i) planning the scope of our audit work and in evaluating the resultof our work; and
(ii) to evaluate the effect of any identified misstatements in thefinancial statements.
We communicate with those charged with governance among other mattersthe planned 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 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
As required by Section 143(3) of the Act we report to the extentapplicable that:
We have sought and obtained all the information and explanations whichto the best of our knowledge and belief were necessary for the purposes of our audit.
a. In our opinion proper books of accounts as required by law have beenkept by the company so far as appears from our examination of those books.
b. The Standalone Balance Sheet the Standalone Statement of Profit andLoss (including other comprehensive income) Standalone Statement of Changes in Equity andthe Standalone Statement of Cash Flows dealt with by this Report are in agreement with therelevant books of account and records maintained.
c. In our opinion the aforesaid financial statements comply with theAccounting Standards specified under Section 133 of the Act.
d. On the basis of the written representations received from thedirectors as on March 31 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2020 from being appointed as a director in termsof Section 164(2) of the Act.
e. With respect to the adequacy of the internal financial controls overfinancial reporting of the company and the operating effectiveness of such controls referto our separate Report in
"Annexure A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the company's internal financial controlsover financial reporting.
f. With respect to the other matters to be included in theAuditor's report in accordance with the requirements of section 197(16) of the Actas amended: a. In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the company to its directors during theyear is in accordance with the provisions of section 197 of the Act.
g. 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:
I. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements II. The Company did not have anylong-term contracts including derivative contracts for which there were any materialforeseeable losses.
III. There has been no delay in transferring amounts required to betransferred to the investor Education and Protection fund by the company.
As required by the companies (Auditor's Report) Order2016("the order") issued by the central Government in terms of section 143 (11)of the Act we give in "Annexure-B" a statement on the matters specified inparagraphs 3 and 4 of the Order.
Annexure - A to the Auditors' Report
Annexure - A to the Auditors' Report
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financialreporting of M/s. TRANSGENE BIOTEK LIMITED as on March 31 2020 in conjunction with ouraudit of the Standalone Financial Statements of the Company for the year ended on thatdate.
Management's responsibility for internal financial controls
The Board of Directors of the Company is responsible for establishingand maintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the standards on auditing prescribed under Section 143 (10) ofthe Companies Act 2013 to the extent applicable to an audit of internal financialcontrols. Those standards and the guidance note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting were established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting 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 judgment including the assessment of therisks of material misstatement in the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial control system over financial reporting.
Meaning of internal financial controls over financial reporting
A company's internal financial control over financial reporting isa process 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 controlover financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
(ii) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and
(iii) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assetsthat could have a material effect on the financial statements.
Limitations of internal financial controls over financial reporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper management ofoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion and according to the information and explanations givento us the Company has in all material respects an adequate internal financial controlsystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
ANNEXURE - B TO THE AUDITORS' REPORT
Annexure referred to in paragraph 3 and 4 of the Independent Auditor'sReport of even date of TRANSGENE BIOTEK LIMITED Hyderabad on the Standalone FinancialStatements for year ended March 31 2020:
1) In terms of the information and explanations sought by us andgiven by the company and the books and records examined by us in the normal course ofaudit and to the best of our knowledge and belief we state the following:
a. The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets. In case of Technology itemwe have been informed that certain balancing components are yet to be received withoutwhich the technology is incomplete for the full effective intended usage. Subject to thisthe other fixed assets have been physically verified by the management and this revealedno material discrepancies.
b. All the assets have been physically verified by the managementduring the year and there is a regular program of verification which in our opinion 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 information and explanations given to us and on thebasis of our examination of the records of the Company the title deeds/lease deeds ofimmovable properties included in Property Plant and Equipment are held in the name of theCompany.
a. The inventory has been physically verified during the year by themanagement. In our opinion the frequency of verification is reasonable.
b. In our opinion and according to the information and explanationsgiven to us the procedures of physical verification of inventories followed by themanagement are reasonable and adequate in relation to the size of the company and thenature of its business.
c. In our opinion and according to the information and explanationsgiven to us the company is maintaining proper records of inventory. No materialdiscrepancies were noticed on verification of the physical stocks with the records.
3) As informed to us the company has not granted any loanssecured or unsecured to companies firms or other parties covered in the registermaintained under section 189 of the Companies Act. Thus clause (iii) of Companies(Auditor's Report) Order 2016 is not applicable.
4) As informed to us the Company has not granted any loans or madeany investments or provided any guarantees or security to the parties covered undersection 185 and 186 of the Act. Therefore clause (iv) of Companies (Auditor's Report)Order 2016 is not applicable.
5) According to the information and explanations given to us theCompany has not accepted deposits against the terms of directives issued by Reserve Bankof India and the provisions of Sections 73 to 76 or any other relevant provisions of theCompanies Act and the rules framed there under. Hence clause (v) of Companies (Auditor'sReport) Order 2019 is not applicable.
6) The central government has not prescribed the maintenance ofcost records under section 148(1) of the Act for any of the services rendered by thecompany. Thus clause (vi) of Companies (Auditor's Report) Order 2019 is not applicable
7) a) The company is not regular in depositing undisputed statutorydues. The amount of arrears as at 31st March 2020 outstanding for a period of more thansix months from the date they became payable are as mentioned below:
| Income tax (Asst year 2009-2010) ||Rs.7.61 lakhs |
| Income Tax (Asst Year 2011-2012) ||Rs.3.11 lakhs |
| The nature of Income tax in TDS ||Rs. 10.03 lakhs |
| ESI Payable ||Rs. 0.38 Lakhs |
| PT Payable ||Rs. 0.705 Lakhs |
| Income Tax Demand (Asst Year:2009-2010) ||Rs.0.68 Lakh |
| Income Tax Demand (Asst Year:2013-2014) ||Rs.73.36 Lakhs |
b) According to the information and explanations given to us thereare no dues of sales tax income tax and excise duty which have not been deposited onaccount of any dispute except the following:
|Nature of Dues ||Amount(R s) ||Period ||From where dispute is pending |
|Customs Duty demand raised for Non- fulfillment of Export Obligation ||59.37 lakhs ||2002 ||CESTAT Chennai |
|Service Tax liability due to difference of opinion on classification of service ||76.15 lakhs ||2011-12 ||Chief Commissioner of Customs Excise & Service Hyderabad |
|Service Tax liability due difference of opinion on classification of service ||7.36 lakhs ||2010 -11 ||Chief Commissioner of Customs Excise & Service Hyderabad |
8) The company does not have any outstanding dues to financialinstitutions banks or debenture holders during the year. Thus clause (viii) of Companies(Auditor's Report) Order 2016 is not applicable.
9) The company has not raised moneys by way of initial public offeror further public offer (including debt instruments) and term loans during the year. Thusclause (ix) of the Companies (Auditor's Report) Order 2016 is not applicable.
10) Based upon the audit procedures performed and the informationand explanations given by the management we report that no fraud by the Company or on theCompany by its officers or employees has been noticed or reported during the year.
11) According to the information and explanations given to us thecompany has not provided for any managerial remuneration as mandated under the provisionsof Section 197 read with Schedule V of the act.
12) As the company is not a Nidhi Company and the Nidhi Rules 2014are not applicable to it the provisions of clause (xii) of the Companies (Auditor'sReport) Order 2016 are not applicable to the Company.
13) In our opinion and according to the information andexplanations given to us the company has not entered into any transaction with therelated parties. Thus clause (xiii) of Companies (Auditor's Report) Order 2016 is notapplicable.
14) Based upon the audit procedures performed and the informationand explanations given by the management the Company has not made any preferentialallotment or private placement of shares or fully convertible debentures during the year.Accordingly the clause (xiv) of Companies (Auditor's Report) Order 2016 is notapplicable.
15) Based upon the audit procedures performed and the informationand explanations given by the management the Company has not entered into any non-cashtransactions with directors or persons connected with him. Thus clause (xv) of Companies(Auditor's Report) Order 2019 is not applicable.
16) In our opinion the company is not required to be registeredunder section 45 IA of the Reserve Bank of India Act 1934 and accordingly the provisionsof clause 3 (xvi) of the Order are not applicable to the Company.
| ||For Manisha Dubey & Associates |
| ||Chartered accountants Firm Registration No. 010114S |
| ||Sd/- |
|PLACE: HYDERABAD ||Manisha Dubey |
|DATE: 24-08-2020 ||Proprietor M. No. 212664 |