TO THE MEMBERS OF VISTA PHARMACEUTICALS LIMITED (AND REDUCED)
Report on the Financial Statements
We have audited the accompanying financial statements of Vista Pharmaceuticals Limited(And Reduced) ("the Company") which comprise the Balance Sheet as at 31stMarch 2017 the Statement of Profit and Loss the Cash Flow Statement for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes 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; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these Financial Statements based on ouraudit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India
a) in case of the Balance Sheet of the state of affairs of the Company as at 31stMarch 2017; b) in the case of Statement of Profit and Loss of the profit for the yearended on that date; and c) in the case of Cash Flow Statement of the cash flows for theyear ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 issued by the CentralGovernment of India in terms of sub-section (11) of section 143 of the Act (hereinafterreferred to the "Order") and on the basis of such checks of the books andrecords of the Company as we considered appropriate and according to the information andexplanations given to us we give in the Annexure 1 a statement on the mattersspecified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books
(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account and with the accountsof the branches
(d) In our opinion the Balance Sheet Statement of Profit and loss and cash flowStatement comply with the Accounting Standards specified under Section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 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 over financialreporting of the company and the operating effectiveness of such controls As required bySection 143 (3) (i) of the Companies Act 2013 refer to our separate Report in Annexure 2.
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us: i. TheCompany has disclosed the impact of pending litigations on its financial statements asnotes to accounts in note no. IV (c) to notes to accounts.
ii. In our opinion and as per the information and explanations provided to us TheCompany did not have any long-term contracts including derivative contracts for whichthere were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in its Financial Statements as toholdings as well as dealings in specified Bank notes during the period from 8th November2016 to 30th December 2016 and these are in accordance with the books of accountsmaintained by the company. Refer Note No. XIII to Notes to accounts.
For V. Kishore Kumar & Associates Chartered Accountants FRN No: 013975S
Place: Hyderabad Partner Date: 30.05.2017 M.No:222865
ANNEXURE-1 TO THE INDEPENDENT AUDITORS REPORT
(Referred to in Paragraph 1 under section (Report on the Other Legal and RegulatoryRequirements of our report even date)
Report on companies (Auditor's Report) Order 2016 (the Order') issued by theCentral Government in terms of section 143 (11) of the companies Act2013
(i) (a) According to the information and explanations given to us the Company ismaintaining proper records showing full particulars including quantitative details andsituation of fixed assets.
(b) According to the information and explanations given to us majority of the fixedassets have been physically verified by the management during the year. In our opinionthe frequency of verification is reasonable having regard to the size of the company andthe nature of its assets. No material discrepancies were noticed on such verification;
(c) All the title deeds of the immovable properties are held in the name of theCompany.
(ii) According to the information and explanations given to us the inventories havebeen physically verified at reasonable intervals by the management and no materialdiscrepancies were noticed on such verification.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to the companies firms or other parties coveredin the register maintained under section 189 of companies' act 2013. Accordingly thesub-clauses (a) and (b) are not applicable to the company
(iv) According to the information and explanations given to us the Company has notgranted any loans nor has it made any investments or given any guarantee or securitieswhich are covered under the provisions of section 185 and 186 of Companies' act 2013.
(v) According to the information and explanations given to us the Company has notaccepted any deposits in terms of the directives issued by Reserve Bank of India and theprovisions of Sections 73 to 76 or any other relevant provisions of the Companies Act2013 and the rules framed there under.
(vi)The Central Government has not prescribed the maintenance of cost records undersub-section (1) of section 148 of the Companies Act 2013 for any of the servicesrendered by the Company.
(vii)(a) In our opinion and according to the information and explanations given to usand on the basis of our examination of the records the company is regular in depositingundisputed statutory dues like Provident Fund Tax Deducted at Source with theappropriate authorities except for Employees State Insurance & Professional Tax.
In our opinion and according to the information and explanations given to us statutorydues outstanding as at the last day of the financial year under audit for a period of morethan six months from the date they became payable are ESI Rs.856804/- and ProfessionalTax Rs.43101/-.
(b) According to the information and explanations given to us there are no disputeddues relating to income tax or service tax or duty of customs or cess which have not beendeposited with the appropriate authorities on account of any dispute.
Claim raised by the IT Dept. settled in favour of the company:
The Income Tax Department has raised a demand of Rs.38658242/- for the assessmentyear 2006-07 on the premise that the interest waived by IDBI under One time settlement ofdues was income for the aforesaid assessment year. The company's appeal against the orderof CIT at the tribunal was settled in favor of the company. The departmental appeal in theHigh Court of Andhra Pradesh was also settled in favor of company. The dept has preferredan appeal against the orders of the Honorable high court of Andhra Pradesh at the SupremeCourt which again was decided in favour of the company in the Current Financial Year2016-17.
(viii) According to the information and explanations given to us the company has notdefaulted in repayment of dues to a financial institution or bank during the year. Thereare no debenture holders.
(ix) According to the information and explanations given to us during the year underreview the Company has not raised any money by way of initial public offer furtherpublic offer. Company has raised Term Loan from Vijaya Bank and the Term Loan Proceeds areutilized for the purpose of application meant for.
(x) According to the information and explanations given to us and based upon the auditprocedures performed by us no fraud by the Company or on the Company committed by itsofficers or employees has been noticed or reported during the year.
(xi) According to the information and explanations given to us none of the promoterdirectors of the company including managing director have received any remuneration duringthe financial year except by professional whole time director. The managerial remunerationpaid to other managerial personal including professional whole time director during theyear is with in the limits prescribed under the provisions of Section 197 read withSchedule V Part II section II (B) of the Companies Act 2013 based on the Net Effectivecapital.
The Total net profit under section 197 of the companies Act 2013 is Rs.23214084 ason 31st March 2017. Profits of the company were inadequate to the remuneration and due tosuch inadequacy in profits Mr. Chalapati Rao will be entitled to remuneration as per thelimits specified under schedule V of the companies Act2013 which is Rs.84 Lakhs perAnnum based on the net effective capital of the company i.e. Rs.161397687.
(xii) As the Company is not a Nidhi Company in terms of the provisions of the CompaniesAct 2013 read with Nidhi Rules 2014 the matters to be reported under clause (xii) arenot applicable.
(xiii) According to the information and explanations given to us in respect of thetransactions with the related parties the Company has complied with the provisions ofSection 177 and 188 of the Companies Act. 2013 wherever applicable. In our opinion thedetails as required by the applicable accounting standards have been disclosed in thefinancial statements for the year under review.
(xiv) According to the information and explanations given to us the Company has madepreferential allotment of shares during the year under review. Company has issued1571286 Equity shares to the promoter at Rs.24.05 per share which inclusive of facevalue Rs.2 per share and Security Premium of Rs.22.05 per share. Company has followed theprocedure prescribed Under section 142 of the Act and necessary documents are filed withROC & SEBI for the preferential allotment and hence company is in compliance withSection 62(1) (c) preferential allotment of shares Rule 13 of Companies (Share Capitaland Debentures) Rules 2014 and Rule 14 of Companies (Prospectus and Allotment ofSecurities) Rules 2014 and purpose of application of the funds so raised.
Place: Hyderabad Date: 30.05.2017
(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him andhence reporting requirement on compliance with the provisions of Section 192 of theCompanies Act 2013 is not applicable.
(xvi) According to the information and explanations given to us and in our opinion theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934.
For V. Kishore Kumar & Associates Chartered Accountants FRN No: 013975S
V.Kishore Kumar Partner M.No:222865
ANNEXURE 2 to the independent auditor's report of even date on the FinancialStatements of Vista Pharmaceuticals Ltd.
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 VISTAPHARMACEUTICALS LIMITED (AND REDUCED) ("the Company") as of March 31 2017 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (the "Guidance Note").These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit.
We conducted our audit in accordance with the Guidance Note and the Standards onAuditing issued by ICAI and deemed to be prescribed under section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial 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 of 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 controls systemover financial reporting.
26th Annual Report 2016-17 51
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
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 financial statements.
Inherent 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 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.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India.
For V. Kishore Kumar & Associates Chartered Accountants FRN No: 013975S
Partner Date: 30.05.2017