Mar 31, 2023
Divi''s Laboratories Limited
Report on the Audit of the Standalone Financial Statements
Opinion
1. We have audited the accompanying standalone financial statements of Divi''s Laboratories Limited ("the Company"), which comprise the Standalone Balance sheet as at March 31, 2023, and the Standalone Statement of profit and loss (including Other comprehensive income), the Standalone Statement of changes in equity and the Standalone statement of cash flows for the year then ended, and Notes to the Standalone Financial statements, including a summary of significant accounting policies and other explanatory information.
2. I n our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("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 March 31, 2023, total comprehensive income (comprising of profit and other comprehensive income), changes in equity and its cash flows for the year then ended.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act . Our responsibilities under those Standards are further described in the "Auditor''s responsibilities for the audit of the standalone 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 together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act 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
4. Key audit matters are those matters that, in our professional judgement, were of most significance 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 financial statements as a
whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
A. Appropriateness of Recognition of Revenue from Sale of Products in Correct Period
Refer to Note 2.4(i) of the summary of significant accounting policies to the standalone financial statements.
The Company has earned revenue of ''7,50,437 lakhs from sale of products during the year. Revenue in respect of sale of products is recognised when the customer obtains control of the company''s product, which occurs at a point in time.
The company has many customers operating in various geographies and sale contracts with customers have differing incoterms which influence the timing of recognition of revenue.
The above was considered to be a key audit matter, since revenue is one of the key performance indicators for the Company and there is a risk of recognition of revenue in an incorrect period given the differing terms with the customers.
How our Audit Addressed the Key Audit Matter
Our procedures included the following:
⢠We evaluated relevant accounting policies and assessed whether it''s in compliance with applicable accounting standards.
⢠We have performed walkthrough and obtained detailed understanding of company''s revenue recognition process.
⢠We evaluated the design, implementation and tested the operating effectiveness of controls around recognition of revenue from sale of products.
⢠Tested revenue from sale of products including sales occurred close to year end period, to their underlying supporting documents like purchase order, invoice, shipping documents, incoterms etc., on sample basis to ensure whether revenue has been recognised in correct period.
⢠We verified the presentation and disclosures are in accordance with applicable accounting standards and reporting framework.
Our procedures did not identify any sales that is
inappropriately recognised.
B. Appropriateness of capitalisation of costs as per Ind AS 16 Property, Plant and Equipment
Refer to Note 3 (c) & 4 (c) to the standalone financial statements.
During the year, the company has incurred capital expenditure aggregating to ''67,464 lakhs on Property, Plant and Equipment (representing Plant and Machinery & Roads and Buildings) and ''48,335 lakhs Capital work in progress towards assets under construction at various locations.
With regard to capitalisation of Plant and Machinery, Roads and Buildings and Capital work in progress, Management has identified specific expenditure including employee costs and other specific overheads relating to each of the assets and has applied judgement to assess if the costs incurred in relation to these assets meet the recognition criteria on Property, Plant and Equipment in accordance with Ind AS 16.
This has been determined as a key audit matter due to the significance of the capital expenditure during the year and the risk that the elements of costs that are eligible for capitalisation are not appropriately capitalised or costs capitalised are not in accordance with the recognition criteria provided in Ind AS 16.
How our Audit Addressed the Key Audit Matter
Our procedures included the following:
⢠Understood, evaluated and tested the design and operating effectiveness of key controls relating to capitalisation of various costs incurred, including in relation to Roads and Building, Plant and Machinery and Capital work-in-progress.
⢠Tested the direct and indirect costs capitalised, on a sample basis, with the underlying supporting documents to ascertain the nature of costs and the basis for allocation, where applicable, and evaluated whether they meet the recognition criteria provided in the Ind AS 16, Property, Plant and Equipment.
⢠Tested, on a sample basis, the appropriateness of employee costs capitalised in relation to Plant and Machinery and Roads and Buildings based on verification of their timesheets etc.
⢠Tested other costs debited to Standalone Statement of profit and loss account, on a sample basis, to ascertain whether these meet the criteria of capitalisation
⢠Assessed the adequacy of disclosures in the standalone financial statements.
Our procedures did not identify, any costs that are eligible
for capitalisation are not appropriately capitalised or costs
capitalised are not in accordance with the recognition criteria
provided in Ind AS 16.
Other Information
5. The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s report, Business Responsibility and sustainability Report, Performance highlights, corporate social responsibility report and Corporate Governance report, but does not include the standalone financial statements and our auditor''s report thereon.
Our opinion on the standalone 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 standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone 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 Management and those Charged with
Governance for the Standalone Financial Statements
6. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone 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 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 Judgements 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone 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.
Auditor''s Responsibilities for the Audit of the Standalone
Financial Statements
7. Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from materia l misstatement, whether due 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 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 standalone financial statements.
8. As part of an audit in accordance with SAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone 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 Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to standalone financial statements 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 auditor''s report to the related disclosures in the standalone 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 auditor''s
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 standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
9. 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.
10. 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.
11. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s 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
12. As required by the Companies (Auditor''s Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
13. 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) Standalone Balance sheet, Standalone Statement of profit and loss (including Other comprehensive income), Standalone Statement of changes in equity and the Standalone statement of cash flows dealt with by this report are in agreement with the books of account.
(d) I n our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March 31, 2023, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023, 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 with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure A".
(g) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), 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 standalone financial statements - Refer Note 38 to the standalone financial statements.
ii. The Company was not required to recognise a provision as at March 31, 2023 under the applicable law or accounting standards, as it does not have any material foreseeable losses on long-term contract. The Company did not have any derivative contracts as at March 31, 2023.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year.
iv. (a) The management has represented that, to the
best of its knowledge and belief, as disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries (Refer Note 39(v)(A) to the standalone financial statements);
(b) The management has represented that, to the best of its knowledge and belief, as disclosed in the notes to the accounts, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries (Refer Note 39(v)(B) to the standalone financial statements); and
(c) Based on such audit procedures that we considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material misstatement
v. The dividend declared and paid during the year by the Company is in compliance with Section 123 of the Act.
vi. As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 (as amended), which provides for books of accounts to have the feature of audit trail, edit log and related matters in the accounting software used by the Company, is applicable for the Company only with effect from financial year beginning April 1, 2023, the reporting under clause (g) of Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), is currently not applicable.
14. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
For Price Waterhouse Chartered Accountants LLP
Firm Registration Number: 012754N/N500016
N.K. Varadarajan
Partner
Place: Hyderabad Membership Number: 90196
Date: May 20, 2023 UDIN: 23090196BGYZIV2663
Mar 31, 2022
Report on the audit of the Standalone financial statements
1. We have audited the accompanying standalone financial statements of Divi''s Laboratories Limited ("the Companyâ), which comprise the Standalone Balance sheet as at March 31, 2022, and the Standalone Statement of profit and loss (including Other Comprehensive Income), the Standalone Statement of changes in equity and the Standalone Statement of cash flows for the year then ended, and Notes to Standalone Financial Statements, including a summary of significant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Actâ) 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 March 31, 2022, total comprehensive income (comprising of profit and other comprehensive income), changes in equity and its cash flows for the year then ended.
3. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the "Auditor''s Responsibilities for the Audit of the standalone financial statementsâ 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 together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act 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.
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. This matter was addressed in the context of our audit of the
standalone financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on this matter.
Key Audit Matter - Appropriateness of capitalisation of costs as per Ind AS 16 Property, Plant and Equipment
Refer to Note 3 (d) & 4 (c) to the standalone financial statements.
During the year, the company has incurred capital expenditure aggregating to H85,874 lakhs on Property, Plant and Equipment (representing Plant & Machinery and Roads & Buildings) and H69,387 lakhs on Capital work in progress towards assets under construction at various locations.
With regard to capitalisation of Plant and Machinery, Roads & Buildings and Capital work in progress, Management has identified specific expenditure including employee costs and other specific overheads relating to each of the assets and has applied judgement to assess if the costs incurred in relation to these assets meet the recognition criteria on Property, Plant and Equipment in accordance with Ind AS 16.
This has been determined as a key audit matter due to the significance of the capital expenditure during the year and the risk that the elements of costs that are eligible for capitalisation are not appropriately capitalised or costs capitalised are not in accordance with the recognition criteria provided in Ind AS 16.
How our audit addressed the Key Audit matter
Our procedures included the following:
⢠Understood, evaluated and tested the design and operating effectiveness of key controls relating to capitalisation of various costs incurred, including in relation to Roads & Building, Plant and Machinery and Capital work-in-progress.
⢠Tested the direct and indirect costs capitalised, on a sample basis, with the underlying supporting documents to ascertain the nature of costs and the basis for allocation, where applicable, and evaluated whether they meet the recognition criteria provided in the Ind AS 16, Property, Plant and Equipment.
⢠Tested, on a sample basis, the appropriateness of employee costs capitalised in relation to Plant and Machinery and Roads and Buildings based on verification of their timesheets etc.
⢠Tested other costs debited to Statement of profit and loss account, on a sample basis, to ascertain whether these meet the criteria for capitalisation.
⢠Assessed the adequacy of disclosures in the standalone financial statements.
Our procedures did not identify, any costs that are eligible for capitalisation are not appropriately capitalised or costs capitalised are not in accordance with the recognition criteria provided in Ind AS 16.
5. The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s report, Business Responsibility Report, Performance highlights, corporate social responsibility report and Corporate Governance report, but does not include the standalone financial statements and our auditor''s report thereon.
Our opinion on the standalone 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 standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone 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 management and those charged with governance for the standalone financial statements
6. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone 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 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone 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.
Auditor''s responsibilities for the audit of the standalone financial statements
7. Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due 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 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 standalone financial statements.
8. 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 standalone 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 Act, we are also responsible for
expressing our opinion on whether the company has adequate internal financial controls with reference to standalone financial statements 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 auditor''s report to the related disclosures in the standalone 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 auditor''s 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 standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
9. 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.
10. 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.
11. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s 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
12. As required by the Companies (Auditor''s Report) Order, 2020 ("the Orderâ), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the "Annexure Bâ a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
13. 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) Standalone Balance Sheet, Standalone Statement of profit and loss (including other comprehensive income), Standalone Statement of changes in equity and Standalone Statement of cash flows dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March 31, 2022 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2022 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 with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure Aâ.
(g) With respect to the other matters to be included in the Auditor''s 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 standalone financial statements - Refer Note 38 to the standalone financial statements;
ii. The Company did not have any long-term contracts for which there were any material foreseeable losses. The Company did not have any derivative contracts as at March 31, 2022.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year.
iv. (a) The management has represented that, to the
best of its knowledge and belief, as disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediariesâ), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries (Refer Note 39 (v) to the standalone financial statements);
(b) The management has represented that, to the best of its knowledge and belief, as disclosed in the notes to the accounts, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether,
directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries (Refer Note 39 (v) to the standalone financial statements); and
(c) Based on such audit procedures that we considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material misstatement.
v. The dividend declared and paid during the year by the Company is in compliance with Section 123 of the Act.
14. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
Firm Registration Number: 012754N/N500016
Partner
Place: Hyderabad Membership Number: 55000
Date: May 23, 2022 UDIN: 22055000AJKGLW7587
Mar 31, 2019
Report on the audit of the Standalone financial statements
Opinion
1. We have audited the accompanying standalone financial statements of Diviâs Laboratories Limited (âthe Companyâ), which comprise the balance sheet as at March 31, 2019, the statement of profit and loss (including Other Comprehensive Income), the statement of changes in equity and statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (âthe Actâ) 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 March 31, 2019, total comprehensive income (comprising of profit and other comprehensive income), changes in equity and its cash flows for the year then ended.
Basis for opinion
3.We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditorâs Responsibilities for the Audit of the Standalone 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 together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act 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
4. Key audit matters are those matters that, in our professional judgment, were of most significance 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 financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Appropriateness of capitalisation of costs as per Ind AS 16 Property, Plant and Equipment
Refer to Note 3 to the standalone financial statements
During the year, the Company has incurred capital costs aggregating to RS.19,481 lakhs on property, plant and equipment (representing Plant & Machinery and Roads & Buildings) and RS.63,393 lakhs on Capital work-in-progress for expansion of its manufacturing facilities at Choutuppal (Unit-1) and Visakhapatnam (Unit-2).
With regard to the capitalisation of Plant and Machinery, Roads and Buildings and Capital work-in-progress, Management has identified certain specific costs incurred for staff costs and other overheads relating to each of the assets and capital work-in-progress and has applied judgement to assess if the costs incurred in relation to these assets and capital work-in-progress meet the recognition criteria of Property, Plant and Equipment in accordance with Ind AS 16.
This has been determined as a key audit matter due to the significance of the capital expenditure during the year and the risk that the elements of costs that are eligible for capitalisation are not appropriately capitalised in accordance with the recognition criteria provided in Ind AS 16.
How our audit addressed the key audit matter
We have performed procedures, including the following, in relation to testing of capitalisation of costs relating to Road and Buildings, Plant and Machinery and capital work-in-progress:
- Understood, evaluated and tested the design and operating effectiveness of key controls relating to capitalisation of various costs incurred, including in relation to Plant and Machinery, Roads and Buildings and capital work-in-progress.
- Tested the direct and indirect costs capitalised, on a sample basis, with the underlying supporting documents to ascertain nature of costs and basis for allocation, where applicable, and evaluated whether they meet the recognition criteria provided in the Indian Accounting Standard 16, Property, Plant and Equipment
- Tested, on a sample basis, the employee costs capitalized in relation to Plant and Machinery and Roads and Buildings based on factors such as review of their timesheets.
- Tested other costs debited to Statement of Profit and Loss Account, on a sample basis, to ascertain whether these meet the criteria for capitalisation.
- Ensuring adequacy of disclosures in the financial statements
Our procedures as mentioned above, did not identify any costs that had been inappropriately capitalised.
Other Information
5.The Companyâs Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Boardâs Report, Business Responsibility Report, performance highlights, Corporate social responsibility report and Corporate Governance Report, but does not include the financial statements and our auditorâs report thereon.
Our opinion on the financial statements does not cover the other information and we will 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.
We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the standalone financial statements
6.The Companyâs Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone 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 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
7. In preparing the standalone financial statements, management is responsible for assessing the Companyâs 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 Companyâs financial reporting process.
Auditorâs responsibilities for the audit of the standalone financial statements
8.Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditorâs 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
9. 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 standalone 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 Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to financial statements 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 managementâs 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 Companyâs ability to continue as a going concern. If we conclude that a material uncertainty exsts, we are required to draw attention in our auditorâs report to the related disclosures in the standalone 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 auditorâs 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 standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
10. 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.
11. 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.
12. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditorâs 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
13. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ), issued by the Central Government of India in terms of subsection (11) of section 143 of the Act, we give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
14. 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 including other comprehensive income, the Statement of Changes in Equity and Cash Flow Statement dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 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 with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Aâ.
(g) With respect to the other matters to be included in the Auditorâs 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 standalone financial statements - Refer Note 40
ii. The Company did not have any long-term contracts for which there were any material foreseeable losses. The Company did not have any derivatives contracts as at March 31, 2019.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
iv. The reporting on disclosures relating to Specified Bank Notes is not applicable to the Company for the year ended March 31, 2019.
Report on the Internal Financial Controls with reference to financial statements under Clause (i) of Sub-section 3 of Section 143 of the Act
1. We have audited the internal financial controls with reference to financial statements of Diviâs Laboratories Limited (âthe Companyâ) as of March 31, 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
2. The Companyâs 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 companyâs 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 Act.
Auditorsâ Responsibility
3. Our responsibility is to express an opinion on the Companyâs internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing deemed to be prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and 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 with reference to financial statements was established and maintained and if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements, 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 auditorâs judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system with reference to financial statements.
Meaning of Internal Financial Controls with reference to financial statements
6.A companyâs internal financial controls with reference to financial statements is a process 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 companyâs internal financial controls with reference to financial statements 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 authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companyâs assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to financial statements
7. Because of the inherent limitations of internal financial controls with reference to financial statements, 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 with reference to financial statements to future periods are subject to the risk that the internal financial control controls with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
8. In our opinion, the Company has, in all material respects, an adequate internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31, 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.
i. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed assets.
(b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.
(c) The title deeds of immovable properties, as disclosed in Note 3 on fixed assets to the standalone financial statements, are held in the name of the Company.
ii. The physical verification of inventory have been conducted at reasonable intervals by the Management during the year. The discrepancies noticed on physical verification of inventory as compared to book records were not material.
iii. The Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Act. Therefore, the provisions of Clause 3(iii), (iii)(a), (iii)(b) and (iii)(c) of the said Order are not applicable to the Company.
iv. The Company has not granted any loans or made any investments, or provided any guarantees or security to the parties covered under Section 185 and 186. Therefore, the provisions of Clause 3(iv) of the said Order are not applicable to the Company.
v. The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed there under to the extent notified.
vi. Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products. We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the 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, in our opinion, the Company is generally regular in depositing undisputed statutory dues in respect of income tax, though there has been a slight delay in a few cases and is regular in depositing undisputed statutory dues including provident fund, employeesâ state insurance, sales tax, service tax, duty of customs, duty of excise, value added tax, cess, goods and service tax and other material statutory dues as applicable, with the appropriate authorities. Also refer note 40 (b) to the financial statements regarding managementâs assessment on certain matters relating to provident fund.
(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of sales tax, service-tax, value added tax which have not been deposited on account of any dispute. The particulars of dues of income tax, entry tax, duty of customs, and duty of excise as at March 31, 2019 which have not been deposited on account of a dispute, are as follows.
Name of the Statue |
Nature of Dues |
Disputed Amount (Rs.) |
Amount deposited (Rs.) |
Period to which the amount relates |
Forum where the dispute is pending |
Customs Act, 1962 |
Penalty |
1,000,000 |
January, 2007 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai. |
|
Customs Act, 1962 |
Penalty |
15,148,315 |
336,475 |
June, 2006 to December, 2008 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
Customs Act, 1962 |
Customs duty and Penalty |
3,669,894 |
March, 2012 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
|
Customs Act, 1962 |
Customs duty and Penalty |
6,314,711 |
November, 2012 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
Customs Act, 1962 |
Penalty |
859,631 |
June,2009 to March, 2010 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
|
Customs Act, 1962 |
Customs duty |
4,988,859 |
4,988,859 |
May, 2014 to February, 2018 |
The commissioner of customs (Appeals) |
Central Excise Act, 1944 |
Penalty |
24,408,690 |
September, 2006 to December, 2008 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
|
Central Excise Act, 1944 |
Penalty |
937,500 |
July, 2009 to March, 2010 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
|
Central Excise Act, 1944 |
Excise duty and Penalty |
1,942,840 |
97,142 |
May,2011 to December, 2011 |
Excise, Customs and Service Tax (Appeals), Visakhapatnam. |
Central Excise Act, 1944 |
Excise duty and Penalty |
76,644 |
5,266 |
Financial years 2014 to 2017 |
Commissioner of Customs, (Appeals), Custom House, Port Area, Visakhapatnam |
Central Excise Act, 1944 |
Service tax and Penalty |
3,506,524 |
263,000 |
April, 2012 to March, 2013 |
Assistant Registrar, The Customs, Excise & Service Tax Appellate Tribunal, Hyderabad |
Central Excise Act, 1944 |
Service tax and Penalty |
4,518,106 |
376,522 |
April, 2010 to March, 2011 |
Commissioner (Appeal-III), Customs, Central Excise & Service Tax, Hyderabad. |
Entry of Goods into Local areas Act, 2001 |
Entry Tax |
46,30,657 |
17,99,856 |
Financial years 200405 to 2016-17 |
Sales Tax appellate tribunal, Hyderabad |
Entry of Goods into Local areas Act, 2001 |
Entry Tax |
43,19,128 |
539,892 |
Financial years 201415 to 2016-17 |
Sales Tax appellate tribunal, Vijayawada |
Income Tax Act, 1961 |
Interest |
40,512 |
Financial Year 2005-06 |
Additional Commissioner of Income Tax, Range-I, Hyderabad. |
viii. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of loans or borrowings to any financial institution or bank or Government or dues to debenture holders as at the balance sheet date.
ix. The Company has not raised any moneys by way of initial public offer, further public offer (including debt instruments) and term loans. Accordingly, the provisions of Clause 3(ix) of the Order are not applicable to the Company,
x. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.
xi. The Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
xii. As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company,
xiii. The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the standalone financial statements as required under Indian Accounting Standard (Ind AS) 24, Related Party Disclosures specified under Section 133 of the Act.
xiv. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.
xv. The Company has not entered into any non cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company,
xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.
For Price Waterhouse Chartered Accountants LLP
Firm Registration Number: 012754N/N500016
Sunit Kumar Basu
Place: Hyderabad Partner
Date: May 25, 2019 Membership Number 55000
Mar 31, 2018
INDEPENDENT AUDITORS'' REPORT
To
The Members of
DIVIâS LABORATORIES LIMITED
Report on the Standalone Indian Accounting Standards (Ind AS) Financial Statements
1. We have audited the accompanying standalone financial statements of Divi''s Laboratories Limited (âthe Company"), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Management''s Responsibility for the Standalone Ind AS Financial Statements
2. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Act") with respect to the preparation of these standalone Ind AS financial statements to give a true and fair view of the financial position, financial performance (including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified in the Companies (Indian Accounting Standards) Rules, 2015 (as amended) 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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors'' Responsibility
3. Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.
4. We have taken into account the provisions of the Act and the Rules made there under including the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
5. We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards and pronouncements require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the standalone Ind AS financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.
7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.
Opinion
8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 March 31, 2018, and its total comprehensive income (comprising of profit and other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Other Matter
9. The Ind AS financial statements of the Company for the year ended March 31, 2017, were audited by another firm of chartered accountants under the Companies Act, 2013 who, vide their report dated May 26, 2017, expressed an unmodified opinion on those financial statements. Our opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
10. As required by the Companies (Auditor''s Report) Order, 2016, issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act (âthe Order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order.
11. 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 (including other comprehensive income), the Cash Flow Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March 31, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018 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 with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure A.
(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 knowledge and belief and according to the information and explanations given to us:
i. The Company has disclosed the impact, if any, of pending litigations as at March 31, 2018 on its financial position in its standalone Ind AS financial statements - Refer Note 40;
ii. The Company has long-term contracts as at March 31, 2018 for which there were no material foreseeable losses. The company did not have any derivative contracts as at March 31, 2018.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended March 31, 2018.
iv. The reporting on disclosures relating to Specified Bank Notes is not applicable to the Company for the year ended March 31, 2018.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act
1. We have audited the internal financial controls over financial reporting of Divi''s Laboratories Limited (âthe Company") as of March 31, 2018 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial Controls
2. 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 Act.
Auditors'' Responsibility
3. 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 âGuidance Note") and the Standards on Auditing deemed to be prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and 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 was established and maintained and if such controls operated effectively in all material respects.
4. 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.
5. 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.
Referred to in paragraph 11(f) of the Independent Auditors'' Report of even date to the members of Divi''s Laboratories Limited on the standalone financial statements for the year ended March 31, 2018
Meaning of Internal Financial Controls Over Financial Reporting
6. A company''s internal financial control over financial reporting is a process 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
7. 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.
Opinion
8. In our opinion, the Company has, 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 March 31, 2018, 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.
Referred to in paragraph 10 of the Independent Auditors'' Report of even date to the members of Divi''s Laboratories Limited on the standalone financial statements as of and for the year ended March 31, 2018
i. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed assets.
(b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.
(c) The title deeds of immovable properties, as disclosed in Note 3 on fixed assets to the financial statements, are held in the name of the Company.
ii. The physical verification of inventory have been conducted at reasonable intervals by the Management during the year. The discrepancies noticed on physical verification of inventory as compared to book records were not material.
iii. The Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Act. Therefore, the provisions of Clause 3(iii), (iii)(a), (iii)(b) and (iii)(c) of the said Order are not applicable to the Company.
iv. The Company has not granted any loans or made any investments, or provided any guarantees or security to the parties covered under Section 185 and 186. Therefore, the provisions of Clause 3(iv) of the said Order are not applicable to the Company.
v. The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed there under to the extent notified.
vi. Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products. We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the 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, in our opinion, the Company is regular in depositing the undisputed statutory dues, including provident fund, employees'' state insurance, income tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess, goods and service tax with effect from July 1, 2017 and other material statutory dues, as applicable, with the appropriate authorities.
(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of sales-tax, service-tax and value added tax which have not been deposited on account of any dispute. The particulars of dues of income tax, duty of customs and duty of excise as at March 31, 2018 which have not been deposited on account of a dispute, are as follows:
Name of the Statue |
Nature of Dues |
Disputed Amount (Rs.) |
Amount deposited (Rs.) |
Period to which the amount relates |
Forum where the dispute is pending |
Customs Act, 1962 |
Penalty |
30,000 |
August, 2005 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
|
Customs Act, 1962 |
Penalty |
1,000,000 |
January, 2007 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai. |
|
Customs Act, 1962 |
Penalty |
15,148,315 |
June, 2006 to December, 2008 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
|
Customs Act, 1962 |
Custom duty and Penalty |
3,669,894 |
March, 2012 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
Name of the Statue |
Nature of Dues |
Disputed Amount (Rs.) |
Amount deposited (Rs.) |
Period to which the amount relates |
Forum where the dispute is pending |
Customs Act, 1962 |
Custom duty and Penalty |
6,314,711 |
November, 2012 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
|
Customs Act, 1962 |
Penalty |
859,631 |
June,2009 to March, 2010 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
|
Customs Act, 1962 |
Custom duty |
5,460,816 |
5,460,816 |
May, 2014 to February, 2018 |
The Commissioner of Customs (Appeals) |
Central Excise Act, 1944 |
Penalty |
24,408,690 |
September, 2006 to December, 2008 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
|
Central Excise Act, 1944 |
Penalty |
937,500 |
July,2009 to March, 2010 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
|
Central Excise Act, 1944 |
Excise duty and Penalty |
1,942,840 |
97,142 |
May,2011 to December, 2011 |
Excise, Customs and Service Tax (Appeals), Vishakapat-nam. |
Central Excise Act, 1944 |
Excise duty and Penalty |
1,391,965 |
94,910 |
December, 2013 to September, 2014 |
Commissioner of Central Excise, Customs & Service Tax, Vishakapatnam. |
Central Excise Act, 1944 |
Excise duty and Penalty |
332,501 |
25,000 |
October, 2014 to September, 2015 |
Commissioner of Customs, (Appeals) Custom House, Port Area, Vishakapatnam. |
Central Excise Act, 1944 |
Excise duty and Penalty |
92,722 |
6,328 |
August, 2013 |
Commissioner of Customs, (Appeals) Custom House, Port Area, Vishakapatnam. |
Central Excise Act, 1944 |
Excise duty and Penalty |
59,469 |
4,055 |
September, 2013 to October, 2013 |
Commissioner of Customs, (Appeals) Custom House, Port Area, Vishakapatnam. |
Central Excise Act, 1944 |
Service tax and Penalty |
3,506,524 |
263,000 |
April, 2012 to March, 2013 |
Assistant Registrar, The Customs, Excise & Service Tax Appellate Tribunal, Khairatabad |
Central Excise Act, 1944 |
Service tax and Penalty |
4,518,106 |
376,522 |
April, 2010 to March, 2011 |
Commissioner (Appeal-III), Customs, Central Excise & Service Tax, Hyderabad. |
Entry of Goods in to Local areas Act, 2001 |
Entry Tax |
4,630,657 |
820,083 |
2004-05 to 201617 |
Sales Tax appellate tribunal, Hyderabad |
Income Tax Act, 1961 |
Interest |
40,512 |
2005-06 |
Additional Commissioner of Income Tax, Range-I, Hyderabad. |
viii. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of loans or borrowings to any financial institution or bank or Government or dues to debenture holders as at the balance sheet date.
ix. The Company has not raised any moneys by way of initial public offer, further public offer (including debt instruments) and term loans. Accordingly, the provisions of Clause 3(ix) of the Order are not applicable to the Company.
x. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.
xi. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
xii. As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii. The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Accounting Standard (AS) 18, Related Party Disclosures specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts] Rules, 2014/ Indian Accounting Standard (Ind AS) 24, Related Party Disclosures specified under Section 133 of the Act.
xiv. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.
xv. The Company has not entered into any non cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.
xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.
For Price Waterhouse Chartered Accountants LLP
Firm Registration Number: 012754N/N500016
Chartered Accountants
Sunit Kumar Basu
Place: Hyderabad Partner
Date: May 26, 2018 Membership Number: 55000
Mar 31, 2017
To
The Members of
DIVI''S LABORATORIES LIMITED
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of DIVI''S LABORATORIES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2017, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management''s Responsibility for the Standalone Ind AS 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 standalone Ind AS financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records in accordance with provisions of the Act for safeguarding 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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditor''s Responsibility
Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We conducted our audit of the Standalone Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Standalone Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the Standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the Standalone Ind AS financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 including the Ind AS, of the state of affairs (financial position) of the Company as at 31st March, 2017, and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of Section143(11) of the Act, we give in "Annexure A", a statement on the matters specified 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 best of our knowledge and belief were necessary for the purpose 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 Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act.
(e) On the basis of written representations received from the directors as on 31st March, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2017 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 Auditor''s 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 standalone Ind AS financial statements - Refer Note No.43 to the financial statements;
ii. The Company did not have any long-term contracts with material foreseeable losses and did not have any long-term derivative contracts as at 31st March, 2017;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31st March, 2017.
iv. The Company has provided requisite disclosures in the financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016. Based on audit procedures and relying on the management representation we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management - Refer Note No.49.
1 (a) The company has maintained proper records showing full particulars, including quantitative details and situation of Fixed Assets.
(b) The fixed assets have been physically verified by the management according to the phased programme designed to cover all the fixed assets on rotation basis. In respect of fixed assets verified according to this programme, which is considered reasonable, no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.
2 The inventories of the company have been physically verified by the Management during the year at reasonable intervals except stocks lying with others which have been verified with reference to confirmations, certificates and other relevant documents where available. The discrepancies noticed on physical verification of stocks as compared to book records, which in our opinion were not material, have been properly dealt with in the books of account.
3 The Company has not granted any loans, secured or unsecured, to companies, firms, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013 ("the Act"). Therefore, the provisions of Clause 3(iii), (iii)(a), (iii)(b) and (iii)(c) of the Order are not applicable to the Company.
4 The Company has not granted any loans or made any investments, or provided any guarantees or security to the parties covered under
Name of the Statute |
Period to which the amount relates |
Nature of dues |
Amount RS, in lakhs |
Forum where dispute is pending |
Customs Act, 1962 |
August, 2005 |
Penalty |
0.30 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
Customs Act, 1962 |
January, 2007 |
Penalty |
10.00 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai. |
Customs Act, 1962 |
June, 2006 to December, 2008 |
Custom duty and Penalty |
18.00 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
Customs Act, 1962 |
March, 2012 |
Custom duty and Penalty |
36.70 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
Customs Act, 1962 |
November, 2012 |
Custom duty and Penalty |
63.15 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
Section 185 and 186 of the Act. Therefore, the provisions of Clause 3(iv) of the Order are not applicable to the Company.
5 The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the rules framed there under to the extent notified.
6 We have broadly reviewed the books of account maintained by the company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under Sub-section (1) of Section 148 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been maintained and are being made up. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.
7 (a) According to the records of the Company and as per the
information and explanations given to us, the company is generally regular in depositing undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues applicable to it with appropriate authorities. In respect of these statutory dues, there are no outstanding dues as on 31.03.2017 which are outstanding for a period of more than six months from the date they became payable.
(b) According to the records of the Company and as per the information and explanations given to us, there are no dues of sales tax or value added tax which has not been deposited on account of dispute as on 31.03.2017, except income tax, service tax, duty of customs and duty of excise the details of which are as given below:
8 According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of loans or borrowings to any financial institution or bank or Government as at the balance sheet date. There was no amount raised by the Company through the issue of Debentures.
name of the Statute |
Period to which the amount relates |
Nature of dues |
Amount RS, in lakhs |
Forum where dispute is pending |
Customs Act, 1962 |
June,2009 to March,2010 |
Penalty |
1.25 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
Central Excise Act, 1944 |
September,2006 to December,2008 |
Excise duty and Penalty |
244.09 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
Central Excise Act, 1944 |
July, 2009 to March,2010 |
Excise duty and Penalty |
9.37 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
Central Excise Act, 1944 |
June, 2010 to March, 2011 |
Excise duty and Penalty |
39.04 |
Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. |
Central Excise Act, 1944 |
May, 2011 to December, 2011 |
Excise duty and Penalty |
18.46 |
Excise, Customs and Service Tax (Appeals), Vishakapatnam. |
Central Excise Act, 1944 |
December, 2013 to September, 2014 |
Excise duty and Penalty |
12.97 |
Commissioner of Central Excise, Customs & Service Tax, Vishakapatnam. |
Central Excise Act, 1944 |
October, 2014 to September, 2015 |
Excise duty and Penalty |
3.08 |
Commissioner of Customs, (Appeals) Custom House, Port Area, Vishakapatnam. |
Central Excise Act, 1944 |
August, 2013 |
Excise duty and Penalty |
0.86 |
Commissioner of Customs, (Appeals) Custom House, Port Area, Vishakapatnam. |
Central Excise Act, 1944 |
September, 2013 to October, 2013 |
Excise duty and Penalty |
0.55 |
Commissioner of Customs, (Appeals) Custom House, Port Area, Vishakapatnam. |
Central Excise Act, 1944 |
April, 2012 to March, 2013 |
Service tax and Penalty |
32.44 |
Assistant Registrar, The Customs, Excise & Service Tax Appellate Tribunal, Khairatabad. |
Central Excise Act, 1944 |
April, 2010 to March, 2011 |
Service tax and Penalty |
45.18 |
Commissioner (Appeal-III), Customs, Central Excise & Service Tax, Hyderabad. |
Income Tax Act, 1961 |
2005-06 |
Interest |
0.41 |
Additional Commissioner of Income Tax, Range-I, Hyderabad. |
Income Tax Act, 1961 |
2007-08 |
Income Tax and Interest |
7.08 |
Income Tax Appellate Tribunal, Hyderabad. |
Income Tax Act, 1961 |
2011-12 |
Income Tax and Interest |
130.27 |
Commissioner of Income Tax, (Appeals)-V Hyderabad. |
Income Tax Act, 1961 |
2012-13 |
Income Tax and Interest |
134.98 |
Assistant Commissioner of Income Tax, Circle-17(1), Hyderabad |
9 The Company has not raised any moneys by way of initial public offer, further public offer (including debt instruments) and term loans. Accordingly, the provisions of Clause 3(ix) of the Order are not applicable to the Company.
10 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.
11 The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
12 As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.
13 The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Indian Accounting Standard (Ind AS) 24, Related Party Disclosures specified under Section 133 of the Act.
14 The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.
15 The Company has not entered into any non cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.
16 The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Actâ)
We have audited the internal financial controls over financial reporting of DIVI''S LABORATORIES LIMITED ("the Company") as of 31st March, 2017 in conjunction with our audit of the standalone Ind AS 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.
Auditors'' Responsibility
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 applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. 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 was 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 judgment, 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
A company''s internal financial control over financial reporting is a process 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.
Opinion
In our opinion, the Company has, 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 31st March, 2017, 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
For P. V. R. K. NAGESWARA RAO & CO.,
Chartered Accountants
Firm''s Registration Number: 002283S
P. V. R.K. NAGESWARA RAO
Hyderabad Partner
26.05.2017 Membership Number: 18840
Mar 31, 2015
We have audited the accompanying standalone financial statements of
DIVI'S LABORATORIES LIMITED ("the Company"), which comprise the Balance
Sheet as at 31st March, 2015, the Statement of Profit and Loss and the
Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone 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 standalone financial statements that give a
true and fair view of the financial position, financial performance and
cash flows of the Company in accordance with the accounting principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with
provisions of the Act for safeguarding 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.
Auditor's Responsibility
Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
thereunder.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the company's preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial control system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the standalone
financial statements.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid standalone 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 31st March, 2015 and its profit and its cash flows for the year
ended on that date.
Emphasis of Matter
We draw attention to Note No. 30(II)(9)(c) regarding investments in
wholly owned subsidiaries whose net worth are eroded and the consequent
possibility of impairment of the equity investment of Rs. 281.61 lakhs
made and non-recovery or partial recovery of loans of Rs. 4358.08 lakhs
given to them by the company. For reasons explained in the said Note,
including the subsidiaries future business plans and growth prospects,
no provision is considered necessary in the accounts of the Company.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order"), issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 3 and 4 of the Order,
to 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
purpose 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, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account.
d. In our opinion, the aforesaid standalone financial statements comply
with the Accounting standards specified under Section 133 of the Act,
read with Rule 7 of the Companies (Accounts) Rules, 2014.
e. On the basis of written representations received from the directors
as on 31st March, 2015 taken on record by the Board of Directors, none
of the directors is disqualified as on 31st March, 2015 from being
appointed as a director in terms of Section 164 (2) of the Act.
f. With respect to the other matters to be included in the Auditor's
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 No.
30.II.4.A to the financial statements;
ii. The Company did not have any long-term contracts with material
foreseeable losses and did not have any long-term derivative contracts
as at 31st March, 2015;
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and protection Fund by the
Company during the year ended 31st March, 2015.
Annexure to Independent Auditor's Report Referred to in Paragraph 1
under the heading of 'Report on Other Legal and Regulatory Requirements'
of our report of even date
1. (a) The company has maintained proper records showing full parti
-culars including quantitative details and situation of Fixed Assets.
(b) The fixed assets have been physically verified by the management
according to the phased programme designed to cover all the fixed
assets on rotation basis. In respect of fixed assets verified
according to this programme, which is considered reasonable, no
material discrepancies were noticed on such verification.
2. (a) The inventories of the company have been physically
verified by the Management during the year at reasonable intervals
except stocks lying with others which have been verified with reference
to confirmations, certificates and other relevant documents where
available.
(b) The procedures of physical verification of Inventories followed by
the management are reasonable and adequate in relation to the size of
the company and the nature of its business.
(c) The Company has maintained proper records of inventories and the
discrepancies noticed on physical verification of stocks as compared to
book records, which in our opinion were not material, have been
properly dealt with in the books of account.
3. The Company has not granted any loans, secured or unsecured, to
Companies, firms or other parties listed in the register maintained
under section 189 of the Companies Act, 2013 ("the Act"). Therefore,
the provisions of Clause 3(iii), (iii) (a) and (iii) (b) of the said
Order are not applicable to the Company.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and nature of its business with regard to
purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control
system with regard to purchase of inventory and fixed assets and for
the sale of goods and services.
5. The Company has not accepted any deposits from the public within the
meaning of Sections 73, 74, 75 and 76 of the Act and the rules framed
there under to the extent notified.
6. We have broadly reviewed the books of account maintained by the
company in respect of products where, pursuant to the Rules made by the
Central Government of India, the maintenance of cost records has been
prescribed under Sub-section (1) of Section 148 of the Act and are of
the opinion that prima facie, the prescribed accounts and records have
been maintained and are being made up. We have not, however, made a
detailed examination of the records with a view to determine whether
they are accurate or complete.
7. (a) According to the records of the Company and as per the information
and explanations given to us, the company is generally regular in
depositing undisputed statutory dues including provident fund, employees
state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory
dues applicable to it with appropriate authorities. In respect of these
statutory dues, there are no outstanding dues as on 31.03.2015 which
are outstanding for a period of more than six months from the date they
became payable.
(b) According to the records of the Company and as per the information
and explanations given to us, there are no dues of sales tax, wealth
tax, value added tax or cess which has not been deposited on account of
dispute as on 31.03.2015, except income tax, duty of customs, duty of
excise and service tax the details of which are as given below :
Name of the Period to which the Nature of dues Amount
Statute amount relates Rs. In Lakhs
Customs Act, 1962 August 2005 Penalty 0.30
Customs Act, 1962 January, 2007 Penalty 10.00
Customs Act, 1962 June, 2006 to Customs duty 18.00
December, 2008 and Penalty
Customs Act, 1962 March, 2012 Customs duty 36.70
and Penalty
Customs Act, 1962 November, 2012 Customs duty 63.15
and Penalty
Customs Act, 1962 June, 2009 to Penalty 1.25
March, 2010
Central Excise September, 2006 to Excise duty 244.09
Act, 1944 December, 2008 and Penalty
Central Excise July, 2009 to Excise duty 9.37
Act, 1944 March, 2010 and Penalty
Central Excise June, 2010 to Excise duty 39.04
Act, 1944 March, 2011 and Penalty
Central Excise May, 2011 to Excise duty 19.43
Act, 1944 December,2011 and Penalty
Central Excise April, 2010 to Excise duty 25.73
Act, 1944 November, 2013 and Penalty
Service Tax under April, 2006 to Penalty 22.69
the Finance December, 2006
Act, 1994
Service Tax under April, 2011 to Penalty 37.79
the Finance March, 2012
Act, 1994
Service Tax under April, 2010 to Penalty 5.93
the Finance March, 2011
Act, 1994
Income Tax 2005-06 Interest 0.41
Act, 1961
Income Tax 2007-08 Income Tax 7.08
Act, 1961 and Interest
Income Tax 2009-10 Income Tax 104.91
Act, 1961 and Interest
Income Tax 2010-11 Income Tax 59.85
Act, 1961 and Interest
NAME OF THE STATUE Forum where dispute is pending
Customs Act, 1962 Customs, Excise & Service Tax Appellate
Tribunal, south Zonal Bench, Bangalore
Customs Act, 1962 Customs, Excise & Service Tax Appellate
Tribunal, south Zonal Bench, Chennai
Customs Act, 1962 Customs, Excise & Service Tax Appellate
Tribunal, south Zonal Bench, Bangalore
Customs Act, 1962 Customs, Excise & Service Tax Appellate
Tribunal, south Zonal Bench, Bangalore
Customs Act, 1962 Customs, Excise & Service Tax Appellate
Tribunal, south Zonal Bench, Bangalore
Central Excise Act1944 Customs, Excise & Service Tax Appellate
Tribunal, south Zonal Bench, Bangalore
Central Excise Act1944 Customs, Excise & Service Tax Appellate
Tribunal, south Zonal Bench, Bangalore
Central Excise Act1944 Customs, Excise & Service Tax Appellate
Tribunal, south Zonal Bench, Bangalore
Central Excise Act1944 Customs, Excise & Service Tax Appellate
Tribunal, south Zonal Bench, Bangalore
Central Excise Act1944 Excise, Customs & Service Tax (Appeals),
Visakhapatnam.
Central Excise Act1944 Customs, Central Excise & Service Tax
(Appeals I and III), Hyderabad.
Service Tax under the
Finance Act, 1994 Customs, Excise & Service Tax Appellate
Tribunal, south Zonal Bench, Bangalore
Service Tax under the
Finance Act, 1994 Customs, Central Excise & Service Tax
(Appeals-III) Hyderabad.
Service Tax under the
Finance Act, 1994 Customs, Central Excise & Service Tax
(Appeals-III) Hyderabad.
Income Tax Act, 1961 Additional Commissioner of Income Tax,
Range-1 Hyderabad.
Income Tax Act, 1961 Appeal yet to be filed with Commissioner of
Income Tax, (Appeals)-X, Hyderabad.
Income Tax Act, 1961 Commissioner of Income Tax, (Appeals) -
II, Hyderabad.
Income Tax Act, 1961 Commissioner of Income Tax, (Appeals) -
X, Hyderabad.
(c) The amount required to be transferred to investor education and
protection fund in accordance with the relevant provisions of the
Companies Act, 1956 (1 of 1956) and rules made thereunder has been
transferred to such fund within time.
8. The Company has no accumulated losses as at the end of the financial
year and it has not incurred any cash losses in the financial year
ended on that date or in the immediately preceding financial year.
9. According to the records of the Company, during the year the Company
has not defaulted in repayment of dues to financial institutions or
bank. There was no amount raised by the Company through the issue of
Debentures.
10. In our opinion, and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from banks or financial institutions during the year.
Accordingly, the provisions of Clause 3(x) of the Order are not
applicable to the Company.
11. According to the records of the Company, as the Company has not
raised any term loans during the year, the provisions of Clause 3(xi) of
the Order are not applicable to the company for this year.
12. During the course of our examination of the books and records of
the Company carried out in accordance with the generally accepted
auditing practices in India, and as per the representation given by the
Company and relied on by us, we have neither come across any instance
of material fraud on or by the Company, noticed or reported during the
year, nor have we been informed of such cases by the management.
For P.V.R.K. NAGESWARA RAO & CO.,
Chartered Accountants
Firm's Registration Number : 002283S
N. ANKA RAO
Hyderabad. Partner
23.05.2015 Membership Number : 23939
Mar 31, 2013
Report on the Financial Statements
We have audited the accompanying financial statements of DIVI''S
LABORATORIES LIMITED ("the Company"), which comprise the Balance Sheet
as at March 31, 2013, and the Statement of Profit and Loss and Cash
Flow Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 ("The Act"). This responsibility includes
the design, implementation and maintenance of internal control 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.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the 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:
a. in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2013;
b. in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
c. in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Emphasis of Matter
We draw attention to Note No 31(II)(9)(c) regarding investments in
wholly owned subsidiaries whose net worth are eroded and the consequent
possibility of impairment of the equity investment of Rs. 281.61 lakhs
made and non- recovery or partial recovery loans of Rs. 4486.31 lakhs
given to them by the company. For reasons explained in the said Note,
including the subsidiaries future business plans and growth prospects,
such impairment if any is considered to be temporary in nature and no
provision is considered necessary in the accounts of the company. Our
opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order"), issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
b. in our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;
c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
d. in our opinion, the Balance Sheet, Statement of Profit and Loss,
and Cash Flow Statement comply with the Accounting Standards referred
to in subsection (3C) of section 211 of the Companies Act, 1956;
e. on the basis of written representations received from the directors
as on March 31, 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2013, from being
appointed as a director in terms of clause (g) of sub- section (1) of
section 274 of the Companies Act, 1956.
ANNEXURE TO INDEPENDENT AUDITOR''S REPORT
Referred to in Paragraph 1 under the heading of ''Report on Other Legal
and Regulatory Requirements'' of our report of even date
1. (a) The company has maintained proper records showing full
particulars including quantitative details and situation of Fixed
Assets.
(b) As explained to us, the fixed assets have been physically verified
by the management according to the phased programme designed to cover
all the fixed assets on rotation basis. In respect of fixed assets
verified according to this programme, which is considered reasonable,
no material discrepancies were noticed on such verification.
(c) The Company has not disposed off substantial part of fixed assets
during the year, which affect the going concern assumption.
2. (a) The inventories of the Company have been physically verified by
the Management during the year at reasonable intervals except stocks
lying with others which have been verified with reference to
confirmations, certificates and other relevant documents where
available.
(b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company has maintained proper records of inventories and the
discrepancies noticed on physical verification of stocks as compared to
book records, which in our opinion were not material, have been
properly dealt with in the books of account.
3. The Company has neither granted nor taken any loans, secured or
unsecured to/from companies, firms or other parties covered in the
register maintained under section 301 of the Act. Consequently, the
provisions of Clause 4(iiib), 4(iiic), 4(iiid), 4(iiif) and 4(iiig) of
the Order are not applicable to the Company.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventory, fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal controls
with regard to purchase of inventory, fixed assets and for the sale of
goods and services.
5. (a) According to the information and explanations given to us and
as confirmed by the Company Secretary and Management of the Company, we
are of the opinion that the particulars of contracts or arrangements
that need to be entered into the register maintained under section 301
of the Companies Act, 1956 have been so entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements entered in the register maintained under Section 301 of
the Companies Act, 1956 and exceeding the value of Rs. 5,00,000/- in
respect of each party have been made at prices which are reasonable
having regard to prevailing market prices at the relevant time.
6. According to the information and explanations given to us, the
Company has not accepted any deposits from the public covered by the
directives issued by the Reserve Bank of India and the provisions of
Section 58A and 58AA or any other relevant provisions of the Act and
the rules framed there under. Consequently, the provisions of Clause
4(vi) of the Order are not applicable to the Company.
7. In our opinion and according to the explanations given to us, the
Company has an internal audit system commensurate with the size and
nature of its business.
8. We have broadly reviewed the records maintained by the Company
pursuant to the order made by the Central Government of India, for the
maintenance of cost records under Section 209(1)(d) of the Companies
Act, 1956 and are of the opinion that prima facie the prescribed
records have been maintained and are being made up. We have not,
however, made a detailed examination of the records with a view to
determine whether they are accurate or complete.
9. (a) According to the records of the Company and as per the
information and explanations given to us, the Company is generally
regular in depositing the undisputed statutory dues including Provident
Fund, Investor Education and Protection Fund, Employees State
Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs
duty, Excise duty, Cess and other material statutory dues applicable to
it with the appropriate authorities. In respect of these statutory
dues, there are no outstanding dues as on 31.03.2013 which are
outstanding for a period of more than six months from the date they
became payable.
(b) According to the records of the Company and as per the information
and explanations given to us, there are no dues of Sales Tax, Wealth
Tax and Cess which have not been deposited on account of any dispute as
on 31.3.2013 except Excise Duty, Customs Duty, Service Tax and Income
Tax, the details of which are as given under:
Name of the Period to which the Nature of dues A
Statute amount relates
Customs August 2005 Penalty and fine for non-
Act, 1962 fulfillment of export
obligation against goods
imported under DEEC Scheme
Customs January, 2007 Penalty for non-fulfillment
Act, 1962 of export obligation against
goods imported under DEEC Scheme
Customs June, 2006 to Customs duty foregone on
Act, 1962 July, 2008 materials used for manufacture
of non-excisable goods, Penalty
for non- payment of customs duty
and Penalty for improper
utilisation of Cenvat Credit
Customs August, 2008 to Penalty for non-payment of
Act, 1962 December, 2008 Customs duty and for improper
utilisation of Cenvat Credit
Name of the Statute Amount Forum where
Rs. in lakhs dispute is pending
Customs Act 1962 0.30 Customs, Excise & Service Tax
Appellate Tribunal, South Zonal
Bench, Bangalore
Customs Act 1962 10.00 Customs, Excise & Service Tax
Appellate Tribunal, South Zonal
Bench, Chennai
Customs Act 1962 16.00 Customs, Excise & Service Tax
Appellate Tribunal, South Zonal
Bench, Bangalore
Customs Act 1962 2.00 Commissioner of Central Excise
(Appeals), Visakhapatnam
10. As per the information and explanations given to us and on an
overall examination of the financial statements of the company for the
current and immediately preceding financial year, we report that the
Company does not have any accumulated losses at the end of the current
financial year nor incurred cash losses in the current and immediately
preceding financial year.
11. According to records of the Company, during the year the Company
has not defaulted in repayment of dues to financial institutions or
banks or debenture holders.
12. As per the information and explanations given to us, as the
Company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities to any body
during the year.
13. In our opinion, as the Company is not a chit fund or a nidhi or
mutual benefit fund or society, the provisions of Clause 4 (xiii) of
the Order are not applicable to the Company for this year.
14. In our opinion, the Company is not dealing in or trading in
Shares, Securities, debentures and other investments.
15. As per the information and explanations given to us, the Company
has not given any guarantees for loans taken by others from banks or
financial institutions.
16. According to records of the Company, the Company has not raised
any term loans during the year and in respect of term loans raised in
earlier years, the same have been applied for the purposes for which
they were raised in the corresponding years.
17. According to records and on an overall examination of the balance
sheet of the company, we report that the funds raised on short term
basis have not been used for long term investments.
18. As per the information and explanations given to us, the Company
has not made any preferential allotment of shares to parties covered in
the Register maintained under section 301 of the Act during the year.
19. As the Company has not issued any debentures during the year,
which requires the creation of security or charge, the provisions of
Clause 4(xix) are not applicable to the Company.
20. As the Company has not raised any money by public issues during
the year, the provisions of Clause 4(xx) are not applicable to the
Company.
21. During the course of our examination of the books and records of
the Company carried out in accordance with the generally accepted
auditing practices in India, and as per the representation given by the
Company and relied on by us, we have neither come across any instance
of material fraud on or by the Company, noticed or reported during the
year, nor have we been informed of such cases by the management.
For P.V.R.K. NAGESWARA RAO & CO.,
Chartered Accountants
Firm''s Registration Number: 002283S
P.V.R.K. NAGESWARA RAO
Hyderabad Partner
20.05.2013 Membership Number: 18840
Mar 31, 2012
1. We have audited the attached Balance Sheet of DIVI'S LABORATORIES
LIMITED ('the Company') as at 31st March 2012, the Statement of
Profit and Loss and also the Cash Flow Statement for the year ended on
that date annexed thereto. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditors' Report) Order, 2003
('the Order') issued by the Central Government of India in terms of
Section 227(4A) of the Companies Act, 1956 ('the Act'), we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we
report that:
i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit.
ii) In our opinion, proper books of account as required by Law have
been kept by the Company so far as appears from our examination of
these books.
iii) The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account.
iv) In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in Section 211 (3C) of the Act, 1956
to the extent applicable.
v) On the basis of the written representations received from the
directors, as on 31.03.2012, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
31st March, 2012 from being appointed as director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956.
vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read in conjunction
with the notes and accounting policies thereon 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:
a) in the case of Balance Sheet, of the state of affairs of the Company
as at 31st March, 2012;
b) in the case of Statement of Profit and Loss, of the profit for the
year ended on that date; and
c) in the case of Cash Flow Statement, of the cash flows for the year
ended on that date.
Annexure
ANNEXURE REFERRED TO IN PARAGRAPH 3 OF AUDIT REPORT OF EVEN DATE ON THE
ACCOUNTS OF DIVI'S LABORATORIES LIMITED ('THE COMPANY') FOR THE
YEAR ENDED 31ST MARCH 2012
1. (a) The company has maintained proper records showing full
particulars including quantitative details and situation of Fixed
Assets.
(b) As explained to us, the fixed assets have been physically verified
by the management according to the phased programme designed to cover
all the fixed assets on rotation basis. In respect of fixed assets
verified according to this programme, which is considered reasonable,
no material discrepancies were noticed on such verification. As regards
capital works in-progress, the same will be verified by the management
on completion of assets.
(c) The fixed assets disposed off during the year did not represent
substantial part of fixed assets of the Company, which will affect the
going concern status of the Company.
2. (a) The inventories of the Company have been physically verified by
the Management during the year at reasonable intervals except stocks
lying with others which have been verified with reference to
confirmations, certificates and other relevant documents where
available.
(b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company has maintained proper records of inventories and the
discrepancies noticed on physical verification of stocks as compared to
book records, which in our opinion were not material, have been
properly dealt with in the books of account.
3. The Company has neither granted nor taken any loans, secured or
unsecured to/from companies, firms or other parties covered in the
register maintained under section 301 of the Act. Consequently, the
provisions of Clause 4(iiib), 4(iiic), 4(iiid), 4(iiif) and 4(iiig) of
the Order are not applicable to the Company.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventory, fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal controls
with regard to purchase of inventory, fixed assets and for the sale of
goods and services.
5. (a) According to the information and explanations given to us and
as confirmed by the Company Secretary and Management of the Company, we
are of the opinion that the particulars of contracts or arrangements
that need to be entered into the register maintained under section 301
of the Companies Act, 1956 have been so entered.
(b) In our opinion and according to the information and explanations
given to us, there are no transactions made in pursuance of contracts
or arrangements entered in the register maintained under Section 301 of
the Companies Act, 1956 and exceeding the value of Rs.5,00,000/- in
respect of each party during the year.
6. According to the information and explanations given to us, the
Company has not accepted any deposits from the public covered by the
directives issued by the Reserve Bank of India and the provisions of
Section 58A and 58AA or any other relevant provisions of the Act and
the rules framed there under. Consequently, the provisions of Clause
4(vi) of the Order are not applicable to the Company.
7. In our opinion and according to the explanations given to us, the
Company has an internal audit system commensurate with the size and
nature of its business.
8. We have broadly reviewed the records maintained by the Company
pursuant to the order made by the Central Government of India, for the
maintenance of cost records under Section 209(1)(d) of the Companies
Act, 1956 and are of the opinion that prima facie the prescribed
records have been maintained and are being made up. We have not,
however, made a detailed examination of the records with a view to
determine whether they are accurate or complete.
9. (a) According to the records of the Company and as per the
information and explanations given to us, the Company is generally
regular in depositing the undisputed statutory dues including Provident
Fund, Investor Education and Protection Fund, Employees State
Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs
duty, Excise duty, Cess and other material statutory dues applicable to
it with the appropriate authorities. In respect of these statutory
dues, there are no outstanding dues as on 31.03.2012 which are
outstanding for a period of more than six months from the date they
became payable.
(b) According to the records of the Company and as per the information
and explanations given to us, there are no dues of Sales Tax, Wealth
Tax and Cess which have not been deposited on account of any dispute as
on 31.3.2012 except Excise Duty, Customs Duty, Service Tax and Income
Tax, the details of which are as given under :
Name of the Period to
which the Nature of dues Amount Forum where
Statute amount
relates Rs. in
lakhs dispute is
pending
Customs August 2005 Penalty and fine
for non- 0.30 Customs,
Excise &
Service Tax
Act, 1962 fulfillment of
export Appellate
Tribunal, South
obligation against
goods Zonal Bench,
Bangalore
imported under
DEEC Scheme
Customs Act, January, 2007 Penalty for
non-fulfillment 10.00 Customs,
Excise &
Service
1962 of export
obligation
against Tax Appellate
Tribunal,
goods imported
under DEEC South Zonal
Bench, Chennai
Scheme
Customs Act, June, 2006 to Customs duty
foregone on 16.00 Customs,
Excise &
Service
1962 July, 2008 materials used
for manufacture Tax Appellate
Tribunal, South
of non-excisable
goods, Zonal Bench,
Bangalore
Penalty for
non- payment of
customs duty and
Penalty for
improper
utilisation of
Cenvat Credit
Customs Act, August, 2008
to Penalty for
non-payment of 2.00 Commissioner
of Central
1962 December, 2008 Customs duty
and for Excise
(Appeals),
Visakhapatnam
improper
utilisation of
Cenvat Credit
Central September,
2006 to Excise duty
and penalty on 244.09 Customs,
Excise &
Service
Excise Act, December,
2008 exempted goods Tax Appellate
Tribunal,
South
1944 Zonal Bench,
Bangalore
Customs Act, June, 2009 to Penalty for
non-payment of 1.25 Preferring
to file appeal
before
1962 March, 2010 Customs duty
and for Customs,
Excise &
Service
improper
utilisation of Tax Appellate
Tribunal, South
Cenvat Credit. Zonal Bench,
Bangalore
Central
Excise July, 2009 to Excise duty and
penalty on 9.37 Preferring
to file appeal
before
Act, 1944 March, 2010 exempted goods Customs,
Excise &
Service Tax
Appellate
Tribunal,
South Zonal
Bench,
Bangalore.
Central
Excise March, 2007 to Penalty on
irregular 22.37 Commissioner
of Central
Excise
Act, 1944 July, 2007 availment of
Cenvat Credit. (Appeals),
Visakhapatnam
Customs Act, March, 2007 to Penalty on
imported Raw 1.00 Commissioner
of Central
Excise
1962 September,
2007 Material (Appeals),
Visakhapatnam
Central
Excise June, 2010 to Difference in
duty and 39.04 Preferring to
file appeal
before
Act, 1944 March, 2011 penalty for
Domestic
clearances Commissioner of
Central Excise
(Appeals),
Visakhapatnam
Central
Excise June, 2006 to Penalty and
interest for 0.59 Commissioner
of Central
Excise
Act, 1944 December,
2007 Domestic
clearances (Appeals),
Visakhapatnam
Service Tax April, 2006 to Penalty on
Service Tax 22.69 Customs,
Excise
& Service Tax
under the
Finance December, 2006 Appellate
Tribunal,
South Zonal
Act, 1994 Bench,
Bangalore
Income Tax
Act, 2005-06 Interest for
delay in 0.41 Additional
Commissioner of
1961 payment of
advance fringe Income Tax,
Range-1,
benefit tax
demanded on Hyderabad.
completion of
assessment
Income
Tax Act, 2007-08 Income Tax and
Interest 63.09 Commissioner of
Income Tax,
1961 demanded on
completion (Appeals) - II,
Hyderabad.
of assessment
10. As per the information and explanations given to us and on an
overall examination of the financial statements of the company for the
current and immediately preceding financial year, we report that the
Company does not have any accumulated losses at the end of the current
financial year nor incurred cash losses in the current and immediately
preceding financial year.
11. According to records of the Company, during the year the Company
has not defaulted in repayment of dues to financial institutions or
banks or debenture holders.
12. As per the information and explanations given to us, as the
Company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities to any body
during the year.
13. In our opinion, as the Company is not a chit fund or a nidhi or
mutual benefit fund or society, the provisions of Clause 4 (xiii) of
the Order are not applicable to the Company for this year.
14. In our opinion, as the Company is not dealing in or trading in
Shares, Securities, debentures and other investments.
15. As per the information and explanations given to us, the Company
has not given any guarantees for loans taken by others from banks or
financial institutions.
16. According to records of the Company, the Company has not raised
any term loans during the year and in respect of term loans raised in
earlier years, the same have been applied for the purposes for which
they were raised in the corresponding years.
17. According to records and on an overall examination of the balance
sheet of the company, we report that the funds raised on short term
basis have not been used for long term investments.
18. As per the information and explanations given to us, the Company
has not made any preferential allotment of shares to parties covered in
the Register maintained under section 301 of the Act during the year.
19. As the Company has not issued any debentures during the year,
which requires the creation of security or charge, the provisions of
Clause 4(xix) are not applicable to the Company.
20. As the Company has not raised any money by public issues during
the year, the provisions of Clause 4(xx) are not applicable to the
Company.
21. During the course of our examination of the books and records of
the Company carried out in accordance with the generally accepted
auditing practices in India, and as per the representation given by the
Company and relied on by us, we have neither come across any instance
of material fraud on or by the Company, noticed or reported during the
year, nor have we been informed of such cases by the management.
For P.V.R.K. NAGESWARA RAO & CO.,
Chartered Accountants
Firm's Registration Number : 002283S
P.V.R.K. NAGESWARA RAO
Visakhapatnam Partner
12-05-2012 Membership No. 18840
Mar 31, 2010
1 We have audited the attached Balance Sheet of DIVIÃS LABORATORIES
LIMITED (Ãthe CompanyÃ) as at 31st March 2010, the Profit and Loss
Account and also the Cash Flow Statement for the year ended on that
date annexed thereto. These financial statements are the responsibility
of the CompanyÃs management. Our responsibility is to express an
opinion on these financial statements based on our audit.
2 We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3 As required by the Companies (Auditorsà Report) Order, 2003 (à the
OrderÃ) issued by the Central Government of India in terms of Section
227(4A) of the Companies Act, 1956 (Ã the ActÃ), we enclose in the
Annexure a statement on the matters specified in paragraphs 4 and 5 of
the said Order.
4 Further to our comments in the Annexure referred to above, we report
that:
i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit.
ii) In our opinion, proper books of account as required by Law have
been kept by the Company so far as appears from our examination of
these books.
iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account.
iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report comply with the Accounting
Standards referred to in Section 211 (3C) of the Act, 1956 to the
extent applicable.
v) On the basis of the written representations received from the
directors, as on 31.03.2010, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
31 st March, 2010 from being appointed as director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956.
vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read in conjunction
with the notes and accounting policies thereon 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:
a) in the case of Balance Sheet of the state of affairs of the Company
as at 31st March, 2010;
b) in the case of Profit and Loss Account of the profit for the year
ended on that date; and
c) in the case of Cash Flow Statement, of the cash flows for the year
ended on that date.
ANNEXURE REFERRED TO IN PARAGRAPH 3 OF AUDIT REPORT OF EVEN DATE ON THE
ACCOUNTS OF DIVIÃS LABORATORIES LIMITED (ÃTHE COMPANYÃ) FOR THE YEAR
ENDED 31ST MARCH 2010
1 (a) The company has maintained proper records showing full
particulars including quantitative details and situation of Fixed
Assets.
(b) As explained to us, the fixed assets have been physically verified
by the management according to the phased programme designed to cover
all the fixed assets on rotation basis. In respect of fixed assets
verified according to this programme, which is considered reasonable,
no material discrepancies were noticed on such verification. As regards
capital works in-progress, the same will be verified by the management
on completion of assets.
(c) The fixed assets disposed off during the year did not represent
substantial part of fixed assets of the Company, which will affect the
going concern status of the Company.
2 (a) The inventories of the Company have been physically verified by
the Management during the year at reasonable intervals except stocks
lying with others which have been verified with reference to
confirmations, certificates and other relevant documents where
available.
(b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company has maintained proper records of inventories and the
discrepancies noticed on physical verification of stocks as compared to
book records, which in our opinion were not material, have been
properly dealt with in the books of account.
3 The Company has neither granted nor taken any loans, secured or
unsecured to/from companies, firms or other parties covered in the
register maintained under section 301 of the Act. Consequently, the
provisions of Clause 4(iiib), 4(iiic), 4(iiid), 4(iiif) and 4(iiig) of
the Order are not applicable to the Company.
4 In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventory, fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal controls
with regard to purchase of inventory, fixed assets and for the sale of
goods and services.
5 (a) According to the information and explanations given to us and as
confirmed by the Company Secretary and Management of the Company, we
are of the opinion that the particulars of contracts or arrangements
that need to be entered into the register maintained under section 301
of the Companies Act, 1956 have been so entered.
(b) In our opinion and according to the information and explanations
given to us, there are no transactions made in pursuance of contracts
or arrangements entered in the register maintained under Section 301 of
the Companies Act, 1956 and exceeding the value of Rs.5,00,000/- in
respect of each party during the year.
6 According to the information and explanations given to us, the
Company has not accepted any deposits from the public covered by the
directives issued by the Reserve Bank of India and the provisions of
Section 58A and 58AA or any other relevant provisions of the Act and
the rules framed there under. Consequently, the provisions of Clause
4(vi) of the Order are not applicable to the Company.
7 In our opinion and according to the explanations given to us, the
Company has an internal audit system commensurate with the size and
nature of its business.
8 We have broadly reviewed the records maintained by the Company
pursuant to the order made by the Central Government of India, for the
maintenance of cost records under Section 209(1)(d) of the Companies
Act, 1956 and are of the opinion that prima facie the prescribed
records have been maintained and are being made up. We have not,
however, made a detailed examination of the records with a view to
determine whether they are accurate or complete.
9 (a) According to the records of the Company and as per the
information and explanations given to us, the Company is generally
regular in depositing the undisputed statutory dues including Provident
Fund, Investor Education and Protection Fund, Employees State
Insurance, Sales Tax, Wealth Tax, Service Tax, Customs duty, Excise
duty, Cess and other material statutory dues applicable to it with the
appropriate authorities except tax deducted at source where delays have
been observed. In respect of these statutory dues, there are no
outstanding dues as on 31.03.2010 which are outstanding for a period of
more than six months from the date they became payable.
(b) According to the records of the Company and as per the information
and explanations given to us, there are no dues of Sales Tax, Wealth
Tax and Cess which have not been deposited on account of any dispute as
on 31.3.2010 except Excise Duty, Customs Duty, Service Tax and Income
Tax, the details of which are as given under
Name of the Period to Nature of dues
Statute which the
amount relates
The Central August, 2005 Penalty and fine for non-
Excise Act 1944 fulfillment of export
obligation against goods
imported under
DEEC Scheme
The Central January, 2007 Penalty for non-fulfillment
Excise Act 1944 of export obligatio
against goods imported
under DEEC Scheme
Custom Act June, 2006 to Customs duty foregone
1962 July, 2007 on materials used for
manufacture of non-exci
-sable goods, penalty for
non-payment of customs
duty and penalty for
improper utilisation of
Cenvat Credit
Custom Act August, 2007 to Penalty for non-payment
1962 July, 2008 of customs duty and
penalty for improper
utilisation of Cenvat Credit
Custom Act August, 2008 to Penalty for non-payment
1962 December 2008 of customs duty and
penalty for improper
utilisation of Cenvat Credit
Service Tax April, 2006 to Service Tax and Penalty
Under the December 2006 for certain expenditure
Finance Tax, in foreign currency. i.e.
1994 Sales Commission and
bank charges.
Service Tax April, 2006 to Interest for delay in
Under the March 2007 payment and penalty
Finance Tax, for non-filing of return
1994
Service Tax January 2005 to Penalty for non-payment
Under the September 2005 of service tax on income
Finance Tax, received and expenditure
1994 in foreign currency
Income Tax 2005-06 Interest for delay in
Act, 1961 payment of advance
fringe benefit tax
demanded on completion
of assessment
Income Tax 1997-98 Incometax and interest
Act, 1961 demand on consequential
order of ITAT
Income Tax 1998-99 Incometax and interest
Act, 1961 demand on consequential
order of ITAT
Name of the Statue Amount Forum where
Rs. in lakhs dispute is pending
The Central
Excise Act 1944 0.30 Customs, Excise & Service Tax
Appellate Tribunal, south
Zonal Bench, Bangalore
The Central
Excise Act 1944 10.00 Customs, Excise & Service Tax
Appellate Tribunal, south
Zonal Bench, Chennai
Custom Act
1962 11.36 Customs, Excise & Service Tax
Appellate Tribunal, south
Zonal Bench, Bangalore
Custom Act
1962 8.00 Customs, Excise & Service Tax
Appellate Tribunal, south
Zonal Bench, Bangalore
Custom Act
1962 2.00 Commissioner of Central Excise
(Appeals), Visakhapatnam
Service Tax
Under the
Finance Tax,
1994 29.32 Commissioner Appeals - III,
Hyderabad.
Service Tax
Under the
Finance Tax,
1994 6.60 Commissioner Appeals - III,
Hyderabad.
Service Tax
Under the
Finance Tax,
1994 10.04 Commissioner Appeals - III,
Hyderabad.
Income Tax
Act, 1961 0.41 Additional Commissioner of
Income Tax, Range - I,
Hyderabad.
Income Tax
Act, 1961 4.26 Honourable High Court of
Andhra Pradesh.
Income Tax
Act, 1961 127.34 Honourable High Court of
Andhra Pradesh.
10. As per the information and explanations given to us and on an
overall examination of the financial statements of the company for the
current and immediately preceding financial year, we report that the
Company does not have any accumulated losses at the end of the current
financial year nor incurred cash losses in the current and immediately
preceding financial year.
11 . According to records of the Company, during the year the Company
has not defaulted in repayment of dues to financial institutions or
banks or debenture holders.
12. As per the information and explanations given to us, as the
Company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities to any body
during the year.
13. In our opinion, as the Company is not a chit fund or a nidhi or
mutual benefit fund or society, the provisions of Clause 4 (xiii) of
the Order are not applicable to the Company for this year.
14. In our opinion, as the Company is not dealing in or trading in
Shares, Securities, debentures and other investments.
15. As per the information and explanations given to us, the Company
has not given any guarantees for loans taken by others from banks or
financial institutions.
16. According to records of the Company, the Company has not raised
any term loans during the year and in respect of term loans raised in
earlier years, the same have been applied for the purposes for which
they were raised in the corresponding years.
17. According to records and on an overall examination of the balance
sheet of the company, we report that the funds raised on short term
basis have not been used for long term investments.
18. As per the information and explanations given to us, the Company
has not made any preferential allotment of shares to parties covered in
the Register maintained under section 301 of the Act during the year.
19. As the Company has not issued any debentures during the year,
which requires the creation of security or charge, the provisions of
Clause 4(xix) are not applicable to the Company.
20. As the Company has not raised any money by public issues during
the year, the provisions of Clause 4(xx) are not applicable to the
Company.
21. During the course of our examination of the books and records of
the Company carried out in accordance with the generally accepted
auditing practices in India, and as per the representation given by the
Company and relied on by us, we have neither come across any instance
of material fraud on or by the Company, noticed or reported during the
year, nor have we been informed of such cases by the management.
For P.V.R.K. NAGESWARA RAO & CO.,
Chartered Accountants
FirmÃs Registration Number : 002283S
P.V.R.K. NAGESWARA RAO
HYDERABAD Partner
22nd May 2010 Membership No. 18840