To the Members of TTK Healthcare Limited
Report on the Audit of the Financial Statements
We have audited the financial statements of TTK Healthcare Limited (the Company) which comprise the balance sheet as at 31 March 2019 and the statement of Profit and Loss statement of changes in equity and statement of cash flows for the year then ended and notes to the financial statements including a summary of significant accounting policies and other explanatory information (herein after referred to as financial statements).
In our opinion and to the best of our information and according to the explanations given to us the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31 March 2019 and profit changes in equity and its cash flows for the 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 Companies Act 2013. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements Section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we 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 judgment were of most significance in our audit of the financial statements of the current year. These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters.
|Revenue Recognition under Ind AS 115||Audit Response|
|Revenue from Contracts entered with Customers||Our audit included but was not limited to the following procedures:|
|Refer Note 2 A.5.(c) and Note 2 B.(g) of Financial Statements||Our procedures included among others obtaining an understanding of the processes and relevant controls relating to the accounting for customer contracts.|
|Revenue is recognized upon transfer of control of promised goods to customers in an amount that reflects the consideration expected to be received in exchange for those goods.||Accounting Policies - Assessing the appropriateness of the Company's Revenue Recognition Policy and the significant accounting judgements estimates and assumptions relating to Promotional Expenditure. |
|Revenue is measured net of expected defective stock returns volume based discounts turnover based discounts and other pricing incentives.|
|The cost of these activities (which are reduced from revenue) are generally recognized at the time the related revenue is recorded which normally precedes their actual discharge.||Control Testing - Testing the effectiveness of Company's Controls over the calculation of returns discounts and incentives.|
|The estimate of returns discounts and incentives recognized based on sales made during the year is material and considered to involve judgements.||Test of Details - Obtaining supporting documentation for credit notes issued in connection with achievement of sales targets by dealers for sample promotional schemes. Critically assessing manual journals posted to revenue to identify unusual or irregular items|
|Therefore there is a risk of estimation errors or errors in stating revenues arising on account of returns discounts and incentives. ||Analytical Procedures - Comparing current year accruals to the prior year and evaluating the reasonableness of techniques of estimation including historical data on performance of similar promotional programs and trends of actual returns.|
Information Other than the Financial Statements and Auditors' Report Thereon
The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Directors Report but does not include the financial statements and our Auditors' Report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Management and Those Charged with Governance for Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act 2013 (the Act) with respect to the preparation of these financial statements that give a true and fair view of the financial position financial performance changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India including the Indian accounting Standards specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditors' Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our Auditors' Report to the related disclosures in the financial statements or if such disclosures are inadequate to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditors' Report. However future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the financial statements including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our Auditors' Report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication
Report on Other Legal and Regulatory Requirements
(1) As required by the Companies (Auditors' Report) Order 2016 (the Order) issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Companies Act 2013 we give in the Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.
(2) As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the best of 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 the Company so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss the Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the Directors as on 31 March 2019 taken on record by the Board of Directors none of the Directors is disqualified as on 31 March 2019 from being appointed as a director in terms of Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls refer to our separate Report in Annexure B.
(g) With respect to the other matters to be included in the Auditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and 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 financial position in its financial statements - Refer Note 5.3 to the financial statements;
(ii) The Company has made provision as required under the applicable law or accounting standards for material foreseeable losses if any on long-term contracts including derivative contracts;
(iii) There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company (3) As required by Section 197(16) of the Act we report that the remuneration paid by the Company to its Directors is in accordance with the prescribed provisions and the remuneration paid to every director is within the limit specified under Section 197.
Referred to in paragraph 1 on `Report on Other Legal and Regulatory Requirements' of our report of even date to the members of TTK Healthcare Limited (the Company) on the financial statements as of and for the year ended 31 March 2019.
(I) In respect of the Company's fixed assets :
(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified over a period of one year. In our opinion this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme the fixed assets were physically verified by the management during the year. In our opinion and according to the information and explanations given to us no material discrepancies were noticed on such verification
(c) According to the information and explanations given to us the records examined by us and based on the examination of the conveyance deeds provided to us we report that the title deeds comprising all the immovable properties of the land and buildings which are freehold are held in the name of the Company / merged companies as at Balance Sheet date. In respect of immovable properties of land and building that have been taken on lease and disclosed as Property Plant and Equipment in the financial statements the lease agreements are in the name of the Company.
(II) The inventory except goods in transit has been physically verified by the management at reasonable intervals during the year. In our opinion the frequency of such verification is reasonable. In respect of goods-intransit subsequent goods receipts have been verified. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been dealt with in the books of account.
(III) Based on our audit procedures & according to the information and explanation given to us the Company has not granted any loans secured or unsecured to parties covered in the register maintained under Section 189 of the Act and hence 3(iii) of the Order is not applicable to the Company.
(IV) In our opinion and according to the information and explanation given to us the Company has complied with provisions of Section 185 and 186 of the Act in respect of grant of loans making investments and providing guarantees and securities as applicable.
(V) Based on our audit procedures & according to the information and explanation given to us the Company has not accepted any deposits from the public within the meaning of the Act and the rules made there under and hence Clause 3(v) of the Order is not applicable.
(VI) We have broadly reviewed the books of account maintained by the Company as specified under Section 148(1) of the Act for maintenance of cost records in respect of the products manufactured by the Company and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However we have not made a detailed examination of cost records with a view to determine whether they are accurate or complete.
(VII) (a) According to the information and explanations given to us and the records of the Company examined by us the Company has generally been regular in depositing undisputed statutory dues including provident fund employees' state insurance income-tax duty of customs duty of excise Goods and Services Tax (GST) cess and any other statutory dues as applicable with the appropriate authorities.
According to the information and explanation given to us and the records of the Company examined by us no undisputed amounts payable in respect of provident fund employees' state insurance income-tax duty of customs duty of excise Goods and Services Tax (GST) cess and any other statutory dues were in arrears as at 31 March 2019 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 based on our examination of the records of the Company there are no dues of Income-tax Sales Tax Service tax Goods and Services Tax (GST) Duty of customs Excise duty and Value added tax as at 31 March 2019 which have not been deposited with the appropriate authorities on account of any dispute except as stated below:
|Name of statute||Nature of dues||Amount under Dispute not yet deposited (Rs. in lakhs)||Period to which amounts relates||Forum where dispute is pending|
|The Central Excise Act 1944||Excise Duty with interest and penalty as applicable||115.95||1988-1989 to 2000-01 and 1995-1996 to 2007-2008||CESTAT Chennai.|
|0.74||1994 to 1996||The Dy. Commissioner of Central Excise Aurangabad.|
|0.42||2002-03||The Commissioner of Central Excise (Appeals) Chennai.|
|The Customs Tariff Act 1975||Customs Duty with interest and penalty||274.24||2010-11 and 2011-12||CESTAT Chennai.|
|20.30||1992-93 to 2005-06||Settlement Commission Hyderabad.|
|Finance Act||Service Tax||3.31||2005-06 to 2007-08||CESTAT Bangalore.|
|State VAT Acts of various States.||Sales Tax||78.25||Various Years between 1986-87 to 2016-17||Before various Sales Tax Authorities of various regions.|
|Income Tax Act1961||Income- Tax||259.21||Various years between 2001-02 to 2012-13||High Court of Madras and ITAT Chennai.|
(VIII) Based on our audit procedures and as per the information and explanations given by the management the Company has not defaulted in repayment of loans or borrowings to financial institutions banks Government or dues to debenture holders.
(IX) In our opinion and according to the information and explanations given to us no moneys were raised by way of Initial Public Offer (IPO) or Further Public Offer (FPO) (including debt instrument) by the Company during the year. Term loans during the year were applied for the purposes for which those were raised.
(X) To the best of our knowledge and belief and according to the information and explanations given to us we report that no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year nor have we been informed of such case by the management.
(XI) According to the information and explanations given to us the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.
(XII) The Company is not a Nidhi Company in accordance with Nidhi Rules 2014. Accordingly the provisions of Clause (xii) of the Order are not applicable.
(XIII) Based on our audit procedures and according to the information and explanations given to us all the transactions entered into with the related parties during the year are in compliance with Section 177 and Section 188 of the Act where applicable and the details have been disclosed in the financial statements as required by the applicable Indian accounting standards.
(XIV) Based on our audit procedures and according to the information and explanations given to us the Company has not made any preferential allotment of shares during the year under review. Accordingly the provisions of Clause (xiv) of the Order are not applicable.
(XV) Based on our audit procedures and according to the information and explanations given to us the Company has not entered into any non-cash transactions with Directors or persons connected with them.
(XVI) Based on our audit procedures and according to the information and explanations given to us the Company is not required to be registered under Section 45-IA of Reserve Bank of India Act 1934.
Referred to in paragraph 2(f) on `Report on Other Legal and Regulatory Requirements' of our report of even date
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (the Act)
We have audited the internal financial controls over financial reporting of TTK Healthcare Limited (the Company) as of 31 March 2019 in conjunction with our audit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to Company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note) and the Standards on Auditing issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 to the extent applicable to an audit of internal financial controls both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting were established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgement including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
ACompany'sinternalfinancialcontroloverfinancialreportingisaprocess designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and Directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the Company's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has maintained in all material respects an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2019 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
|M/s. PKF Sridhar & Santhanam LLP|
|Firm's Regn. No.003990S/S200018|
|Place : Bengaluru||Partner|
|Date : May 30 2019||Membership No.024105|