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Transgene Biotek Ltd.

BSE: 526139 Sector: Health care
NSE: N.A. ISIN Code: INE773D01018
BSE 00:00 | 23 Oct 4.10 0.11
(2.76%)
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NSE 05:30 | 01 Jan Transgene Biotek Ltd
OPEN 4.15
PREVIOUS CLOSE 3.99
VOLUME 2635
52-Week high 6.85
52-Week low 2.05
P/E
Mkt Cap.(Rs cr) 31
Buy Price 4.10
Buy Qty 1.00
Sell Price 4.13
Sell Qty 899.00
OPEN 4.15
CLOSE 3.99
VOLUME 2635
52-Week high 6.85
52-Week low 2.05
P/E
Mkt Cap.(Rs cr) 31
Buy Price 4.10
Buy Qty 1.00
Sell Price 4.13
Sell Qty 899.00

Transgene Biotek Ltd. (TRANSGENEBIOTEK) - Auditors Report

Company auditors report

To

The Members

TRANSGENE BIOTEK LIMITED

Report on the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying Standalone Ind AS financial statements ofM/s.Transgene Biotek Limited ("The Company") which comprise the Balance Sheetas at 31st March 2019 the Statement of Profit and Loss including the Statement of OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity forthe year ended and a summary of the significant accounting policies and other explanatoryinformation(herein after referred to as"standalone Ind AS financialstatements").

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 Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thefinancial position of the Company as at 31March 2019 and its financial performanceincluding other comprehensive income its cash flows and changes in equity for the yearended on that date.

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 Standards are furtherdescribed in the Auditor's responsibilities for the audit of the Standalone financialstatements section of our report. We are independent of the Group in accordance with theethical requirements that are relevant to our audit of the Standalone financial statementsin India in terms of the Code of Ethics issued by ICAI and the relevant provisions of theAct and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.

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. 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
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. Principal Audit procedures performed :
• 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.
• Further on November 06th 2018 SEBI has issued an order against ref SEBI/WTM/ MPB/EFDI-DRA-4/SB/2018 revoking its ban on 3 entities out of 7. However in these 3 entities the company is not listed hence the ban shall continue on the company.
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. • As the case is under investigation and the interim order is under appeal from the company side we are unable to comment at this stage as to what impact it could have on the financial statements of the company.
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 2018-19. 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 and Auditor's report thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in ManagementDiscussion and Analysis Board's Report including annexures thereto BusinessResponsibility Report Governance and shareholder's information but does not include thestandalone financial statements and our auditor's report 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 and the reports of the other auditors as furnished to us weconclude that there is a material misstatement of this other information; we are requiredto 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 matters stated in Section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also include maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; andthe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error

In preparing the Standalone financial statements management is responsible forassessing the company 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 is responsible for overseeing the company's financial reportingprocess.

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 HoldingCompany has adequate internal financial controls with reference to financial statements inplace and the operating effectiveness of such 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 ability ofthe Group to continue as a going concern. If we conclude that a material uncertaintyexists we are required to draw attention in our auditor's report to the relateddisclosures in the standalone financial statements or if such disclosures are inadequateto modify 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 Group tocease to continue 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.

Materiality is the Magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably Knowledgeable user of the financial statements may be influenced We considerquantitative materiality and qualitative matters in (i) planning the scope of our auditwork and in evaluating the result of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

We communicate with those charged with governance among other matters the plannedscope and timing of the audit and significant audit findings including any significantdeficiencies 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 reportunless 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 requirements

As required by Section 143(3) of the Act we report to the extent applicable that:

We have sought and obtained all the information and explanations which to the best ofour knowledge and belief were necessary for the purposes of our audit.

a. In our opinion proper books of accounts as required by law have been kept by thecompany so far as appears from our examination of those books.

b. The Standalone Balance Sheet the Standalone Statement of Profit and Loss (includingother comprehensive income) Standalone Statement of Changes in Equity and the StandaloneStatement of Cash Flows dealt with by this Report are in agreement with the relevant booksof account and records maintained.

c. In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act.

d. 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.

e. With respect to the adequacy of the internal financial controls over financialreporting of the company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the company's internal financial controls overfinancial reporting.

f. With respect to the other matters to be included in the Auditor's report inaccordance with the requirements of section 197(16) of the Act as amended:

a. In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

g. 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:

I. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements

II. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

III. There has been no delay in transferring amounts required to be transferred to theinvestor Education and Protection fund by the company.

As required by the companies (Auditor's Report) Order 2016("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 in paragraphs 3 and 4 of theOrder.

For Manisha Dubey & Associates
Chartered accountants
Firm Registration No. 010114S
S/d
PLACE : HYDERABAD Manisha Dubey
DATE : 28-08-2019 Proprietor
M. No. 212664

Annexure - A to the Auditors' Report

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 M/s.TRANSGENE BIOTEK LIMITED as on March 31 2019 in conjunction with our audit of theStandalone Financial Statements of the Company for the year ended on that date.

Management's responsibility for internal financial controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting 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.

Auditors' responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the standards on auditing prescribed under Section 143 (10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. Thosestandards and the guidance note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting were established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing 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 judgment including the assessment of the risks ofmaterial misstatement in the financial statements whether due 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 Company's internal financial control systemover financial reporting.

Meaning of internal financial controls over financial reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (i) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (ii) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (iii) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that 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 over financialreporting including the possibility of collusion or improper management of override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion and according to the information and explanations given to us theCompany has in all material respects an adequate internal financial control system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at March 31 2019 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.

For Manisha Dubey & Associates
Chartered accountants
Firm Registration No. 010114S
S/d
PLACE : HYDERABAD Manisha Dubey
DATE : 28-08-2019 Proprietor
M. No. 212664

ANNEXURE - B TO THE AUDITORS' REPORT

Annexure referred to in paragraph 3 and 4 of the Independent Auditor's Report of evendate of TRANSGENE BIOTEK LIMITED Hyderabad on the Standalone Financial Statements foryear ended March 31 2019:

1) In terms of the information and explanations sought by us and given by the companyand the books and records examined by us in the normal course of audit and to the best ofour knowledge and belief we state the following:

a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets. In case of Technology item we havebeen informed that certain balancing components are yet to be received without which thetechnology is incomplete for the full effective intended usage. Subject to this the otherfixed assets have been physically verified by the management and this revealed no materialdiscrepancies.

b. All the assets have been physically verified by the management during the year andthere is a regular program of verification which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. No material discrepancieswere noticed on such verification.

c. According to information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds/lease deeds of immovableproperties included in Property Plant and Equipment are held in the name of the Company.

2) Inventory:

a. The inventory has been physically verified during the year by the management. In ouropinion the frequency of verification is reasonable.

b. In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the company and the nature of itsbusiness.

c. In our opinion and according to the information and explanations given to us thecompany is maintaining proper records of inventory. No material discrepancies were noticedon verification of the physical stocks with the records.

3) As informed to us the company has not granted any loans secured or unsecured tocompanies firms or other parties covered in the register maintained under section 189 ofthe Companies Act. Thus clause (iii) of Companies (Auditor's Report) Order 2016 is notapplicable.

4) As informed to us the Company has not granted any loans or made any investments orprovided any guarantees or security to the parties covered under section 185 and 186 ofthe Act. Therefore clause (iv) of Companies (Auditor's Report) Order 2016 is notapplicable.

5) According to the information and explanations given to us the Company has notaccepted deposits against the terms of directives issued by Reserve Bank of India and theprovisions of Sections 73 to 76 or any other relevant provisions of the Companies Act andthe rules framed there under. Hence clause (v) of Companies (Auditor's Report) Order 2018is not applicable.

6) The central government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the services rendered by the company. Thus clause(vi) of Companies (Auditor's Report) Order 2018 is not applicable

7) a) The company is not regular in depositing undisputed statutory dues. The amount ofarrears as at 31st March 2019 outstanding for a period of more than six months from thedate 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. 0.548 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 there are no dues ofsales tax income tax and excise duty which have not been deposited on account of anydispute except the following:

Nature of Dues Amount (Rs.) Period Forum where dispute is pending
Customs Duty demand raised for 59.37 lakhs 2002 CESTAT Chennai.
Non-fulfillment of Export
Obligation
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 to 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 financial institutions banks ordebenture 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 offer or further publicoffer (including debt instruments) and term loans during the year. Thus clause (ix) of theCompanies (Auditor's Report) Order 2016 is not applicable.

10) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the year.

11) According to the information and explanations given to us the company has notprovided for any managerial remuneration as mandated under the provisions of Section 197read with Schedule V of the act.

12) As the company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of clause (xii) of the Companies (Auditor's Report) Order 2016 arenot applicable to the Company.

13) In our opinion and according to the information and explanations given to us thecompany has not entered into any transaction with the related parties. Thus clause (xiii)of Companies (Auditor's Report) Order 2016 is not applicable.

14) Based upon the audit procedures performed and the information and explanationsgiven by the management the Company has not made any preferential allotment or privateplacement of shares or fully convertible debentures during the year. Accordingly theclause (xiv) of Companies (Auditor's Report) Order 2016 is not applicable.

15) Based upon the audit procedures performed and the information and explanationsgiven by the management the Company has not entered into any non-cash transactions withdirectors or persons connected with him. Thus clause (xv) of Companies (Auditor's Report)Order 2018 is not applicable.

16) In our opinion the company is not required to be registered under section 45 IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi) ofthe Order are not applicable to the Company.

For Manisha Dubey & Associates
Chartered accountants
Firm Registration No. 010114S
S/d
Manisha Dubey
PLACE : HYDERABAD
Proprietor
DATE : 28-08-2019
M. No. 212664

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