Mar 31, 2023
Report on the Audit of the Standalone Ind AS financial
statements
Opinion
We have audited the accompanying standalone Ind AS financial statements of Sun Pharmaceutical Industries Limited (the âCompanyâ), which comprise the Balance sheet as at March 31, 2023, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone Ind AS financial statements, including a summary of significant accounting policies and other explanatory information.
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 Companies Act, 2013, as amended (the âActâ) 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, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the âAuditor''s Responsibilities for the Audit of the Standalone Ind AS Financial Statements'' section of our report. We are independent of the Company in accordance
with the âCode of Ethics'' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the 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 audit opinion on the standalone Ind AS financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements for the financial year ended March 31, 2023. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. For each key audit matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report.
We have fulfilled the responsibilities described in the âAuditor''s responsibilities for the audit of the standalone Ind AS financial statements'' section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.
Key audit matter |
How our audit addressed the key audit matter |
Litigations (as described in Note 39 of the standalone Ind AS financial statements) |
|
The Company is involved in various legal proceedings including product liability, contracts, employment claims, Department of Justice (DOJ) investigations, anti-trust and other regulatory matters relating to conduct of its business. The Company assesses the need to make provision or to disclose a contingent liability on a case-to-case basis considering the underlying facts of each litigation. The eventual outcome of the litigations is uncertain and estimation at balance sheet date involves extensive judgement of management including input from legal counsel due to complexity of each litigation. Adverse outcomes could significantly impact the Company''s reported results and balance sheet position. Considering the judgement involved in determining the need to make a provision or disclose as contingent liability, the matter is considered a Key Audit Matter. |
Our audit procedures amongst others included the following: ⢠Evaluated the design and tested the operating effectiveness of controls in respect of the identification and evaluation of litigations, the recording / re-assessment of the related liabilities, provisions and disclosures. ⢠Obtained a list of litigations from the Company''s in-house legal counsel; identified material litigations from the aforementioned list and performed inquiries with the said counsel; obtained and read the underlying documents to assess the assumptions used by management in arriving at the conclusions. ⢠Circulated, obtained and read legal confirmations from Company''s external legal counsels in respect of material litigations and considered that in our assessment. ⢠Verified the disclosures related to provisions and contingent liabilities in the standalone Ind AS financial statements to assess consistency with underlying documents. |
Key audit matter |
How our audit addressed the key audit matter |
Tax litigations and recognition of deferred tax assets (as described in Note 9 and 39 of the standalone Ind AS financial statements) |
|
The Company has significant tax litigations for which the |
Our audit procedures amongst others included the following: |
Company assesses the outcome on a case-to-case basis |
⢠Evaluated the design and tested the operating effectiveness of controls in |
considering the underlying facts of each tax litigation. Adverse |
respect of the identification and evaluation of tax litigations/deferred tax |
outcomes could significantly impact the Company''s reported |
and the recording and re-assessment of the related liabilities/assets and |
results and balance sheet position. |
provisions and disclosures. |
The assessment of outcome of litigations involves significant |
⢠Obtained list of ongoing tax litigations from management along with |
judgement which is dependent on the facts of each case, |
their assessment of the cases based on past precedents, judgements |
supporting judicial precedents and legal opinions of external |
and matters in the jurisdiction, legal opinions sought by management, |
and internal legal counsels and hence the matter has been considered as a Key Audit Matter. |
correspondences with tax department etc. ⢠Engaged tax experts, to evaluate management''s assessment of the |
Recognition of deferred tax assets involves the assessment |
outcome of these litigations. Our experts considered legal precedence |
of its recoverability within the allowed time frame requiring |
and other rulings in evaluating management''s position on these tax |
significant estimate of the financial projections, availability of sufficient taxable income in the future and also involving |
litigations. |
significant judgements in the interpretation of tax regulations and tax positions adopted by the Company. Considering the |
⢠Tested management''s assumptions including forecasts and sensitivity analysis in respect of recoverability of deferred taxes on unabsorbed |
judgement involved in determining the recovery of deferred tax |
depreciation/carry forward losses/Minimum Alternate Tax (MAT) credit. |
assets, the matter is considered a Key Audit Matter. |
⢠Verified disclosures of the tax positions, tax loss carry forwards and tax litigations in the standalone Ind AS financial statements. |
Identification and disclosures of Related Parties (as described in |
Note 50 of the standalone Ind AS financial statements) |
The Company has related party transactions which include, |
Our audit procedures amongst others included the following: |
amongst others, sale and purchase of goods/services to its |
⢠Evaluated the design and tested the operating effectiveness of controls |
subsidiaries, associates, joint ventures and other related parties and lending, investment and borrowing to/from its subsidiaries, |
over identification and disclosure of related party transactions. |
associates and joint ventures. |
⢠Obtained a list of related parties from the Company''s management and traced the related parties to declarations given by directors, where |
Identification and disclosure of related parties was a significant area of focus and hence is considered a Key Audit Matter. |
applicable, and to Note 50 of the standalone Ind AS financial statements. ⢠Read minutes of the meetings of the Board of Directors and Audit Committee and traced related party transactions with limits approved by Audit Committee / Board. ⢠Read declarations of related party transactions given to the Board of Directors and Audit Committee. ⢠Verified the disclosures in the standalone Ind AS financial statements for compliance with Ind AS 24. |
Assessment of recoverable amount of Investment in Sun Pharma Holdings, Mauritius (as described in Note 55(2a) of the standalone Ind AS financial statements) |
|
The Company has total investments in subsidiaries of |
Our audit procedures amongst others included the following: |
? 1,53,395.3 Million for which it conducted an annual |
⢠Evaluated the design and tested the operating effectiveness of controls |
impairment test. During the year ended March 31, 2023, the Company considered an impairment allowance of |
over impairment assessment of investments. |
? 29,377.9 Million based on its assessment of the recoverable |
⢠Obtained the Company''s computation of recoverable amount and tested |
amount of Investment in Sun Pharma Holdings, Mauritius. The |
the mathematical accuracy and reasonableness of key assumptions. |
net value of investment in Sun Pharma Holdings, Mauritius |
⢠Evaluated the objectivity, competency and independence of the experts |
after considering this allowance is ? 66,705.8 Million. |
engaged by the Company and reviewed the valuation reports issued by |
Due to the significance of the balances involved and significant |
such experts. |
estimates and judgements concerning the estimated future |
⢠Assessed the cash flow forecasts through analysis of actual past |
cash flows, associated discount rates and growth rates |
performance, and comparison to previous forecasts. |
based on management''s view of future business prospects, |
⢠With the involvement of our experts, assessed the assumptions around |
changes to which could lead to material changes in the |
the key drivers of the cash flow forecasts and methodologies used by |
estimated recoverable amount, this has been considered as a |
Management and experts to determine the recoverable amount. |
Key Audit Matter. |
⢠Assessed the conclusions reached by management and those charged with governance on account of various estimates and judgements. ⢠Evaluated the disclosures in the standalone Ind AS financial statements. |
Other intangible assets (as described in Note 4 of the standalone Ind AS financial statements) |
|
The Company has significant intangible assets, comprising |
Our audit procedures amongst others included the following: |
product intangibles and acquired trademarks. The Company |
⢠Evaluated the design and tested the operating effectiveness of |
conducts an annual impairment testing of intangible assets. |
management''s controls in assessing the carrying value of intangible |
Significant judgements are used to estimate the recoverable |
assets. |
amount of these intangible assets and hence is considered as a |
⢠Obtained the Company''s computation of recoverable amount and tested |
Key Audit Matter. |
the mathematical accuracy and reasonableness of key assumptions. ⢠Obtained and evaluated management''s sensitivity analysis to ascertain the impact of changes in key assumptions. ⢠Evaluated the disclosures in the standalone Ind AS financial statements. |
Key audit matter |
How our audit addressed the key audit matter |
|
Information security incident (as described in Note 55(11) of the standalone Ind AS financial statements) |
||
On March 1, 2023, the Company experienced an Information |
Our audit procedures amongst others included the following: |
|
security incident related to ransomware wherein certain IT |
⢠|
Made inquiries with the Company''s Chief Information Officer and Chief |
systems and data contained therein were impacted (âIncidentâ). |
Financial Officer to understand their assessment of the Incident and the |
|
In response to this incident, the Company engaged external |
measures in place to mitigate this risk, focusing on the principal financial |
|
consultants to analyse the Incident and restore the IT systems. |
systems used in the preparation of the Financial Statements. |
|
The Company also assessed the compliance requirements |
⢠|
Read the reports of the external consultants, engaged by management, |
arising due to this Incident including inputs from internal |
to gain an understanding of the cause of the Incident and its impact on |
|
legal counsel. |
IT systems including financial systems. |
|
The Company took certain measures to protect its core |
⢠|
Inquired into the measures taken by management to restore the systems |
operational and financial systems which resulted into |
and augment the existing security controls across the organization. |
|
modifications in the internal control systems and processes |
⢠|
Obtained a representation from Management in consultation with the |
including those relating to financial reporting. |
Company''s internal legal counsel to determine whether Incident resulted |
|
The Company has taken certain immediate steps and is also |
in any violation of laws/regulations applicable in jurisdictions where |
|
implementing certain long-term measures to augment its |
Company operates. |
|
security controls systems across the organization. |
⢠|
Considered information from our internal experts and evidence from |
We have identified this as a key audit matter as it was an |
our other audit procedures, in order to assess whether any contradictory |
|
area of significant auditor attention which included critical |
evidence exists which suggests the financial systems have been |
|
assessment of the principal financial systems and internal |
compromised. |
|
controls used in /relied on for the preparation of the |
⢠|
Performed following procedures considering the facts above: |
Standalone Ind AS financial statements. |
⢠|
- Tested alternate internal controls over financial reporting implemented by Management during the period of breach. - Revisited and extended the nature, timing and extent of the planned substantive procedures arising out of the Incident. - Obtained management''s assessment of the impact on internal controls over financial reporting pertaining to this Incident. Assessed the related disclosures to the financial statements. |
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report but does not include the standalone Ind AS financial statements and our auditor''s report thereon.
Our opinion on the standalone Ind AS 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 Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the standalone Ind AS 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 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 Act with respect to the preparation of these standalone Ind AS financial statements that 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 (Ind AS) specified under section 133 of the Act
read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the 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.
In preparing the standalone Ind AS 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.
Auditorâs Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone Ind AS 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 Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone Ind AS 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 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 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 Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate
with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements for the financial year ended March 31, 2023 and are therefore 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
1. As required by the Companies (Auditor''s Report) Order, 2020 (the âOrderâ), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the âAnnexure 1â 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 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 the Statement of Other Comprehensive Income, 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 Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(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 these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in âAnnexure 2â to this report;
(g) In our opinion, the managerial remuneration for the year ended March 31, 2023 has been paid
/ provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(h) 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 Ind AS financial statements - Refer Note 39 to the standalone Ind AS financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses,
if any, on long-term contracts including derivative contracts - Refer Note 25 and 29 to the standalone Ind AS financial statements;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company, except a sum of ? 1.4 Million which has been kept in abeyance due to pending legal cases.
iv. (a) The management has represented
that, to the best of its knowledge and belief and read with note 55(21) to the standalone Ind AS financial statements, 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 (âIntermediariesâ), 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 (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(b) The management has represented that, to the best of its knowledge and belief and read with note 55(21) to the standalone Ind AS financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (âFunding 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 (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
(c) Based on such audit procedures that were 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 final dividend paid by the Company during the year in respect of the same declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend.
The interim dividend declared and paid by the Company during the year and until the date of this audit report is in accordance with section 123 of the Act.
As stated in note 43 to the standalone Ind AS financial statements, the Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.
vi. As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable for the Company only w.e.f. April 1, 2023, reporting under this clause is not applicable.
For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Paul Alvares
Partner
Membership Number: 105754
UDIN: 23105754BGQUOQ4724
Place of Signature: Mumbai
Date: May 26, 2023
Mar 31, 2022
REPORT ON THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTSOPINION
We have audited the accompanying standalone Ind AS financial statements of Sun Pharmaceutical Industries Limited (the âCompanyâ), which comprise the Balance sheet as at March 31 2022, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone Ind AS financial statements, including a summary of significant accounting policies and other explanatory information.
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 Companies Act, 2013, as amended (the âActâ) 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, its loss including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act.
Our responsibilities under those Standards are further described in the âAuditor''s Responsibilities for the Audit of the Standalone Ind AS Financial Statements'' section of our report. We are independent of the Company in accordance with the âCode of Ethics'' issued by the Institute
of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the 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 audit opinion on the standalone Ind AS financial statements.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements for the financial year ended March 31, 2022. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. For each key audit matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the âAuditor''s responsibilities for the audit of the standalone Ind AS financial statements'' section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.
Key audit matter |
How our audit addressed the key audit matter |
Litigations (as described in Note 38 of the standalone Ind AS financial statements) |
|
The Company is involved in various legal proceedings including product liability, contracts, employment claims, Department of Justice (DOJ) investigations, anti-trust and other regulatory matters relating to conduct of its business. The Company assesses the need to make provision or to disclose a contingent liability on a case-to-case basis considering the underlying facts of each litigation. The eventual outcome of the litigations is uncertain and estimation at balance sheet date involves extensive judgement of management including input from legal counsel due to complexity of each litigation. Adverse outcomes could significantly impact the Company''s reported results and balance sheet position. Considering the judgement involved in determining the need to make a provision or disclose as contingent liability, the matter is considered a Key Audit Matter. |
Our audit procedures amongst others included the following: ⢠Evaluated the design and tested the operating effectiveness of controls in respect of the identification and evaluation of litigations, the recording / re-assessment of the related liabilities, provisions and disclosures. ⢠Obtained a list of litigations from the Company''s in-house legal counsel; identified material litigations from the aforementioned list and performed inquiries with the said counsel; obtained and read the underlying documents to assess the assumptions used by management in arriving at the conclusions. ⢠Circulated, obtained and read legal confirmations from Company''s external legal counsels in respect of material litigations and considered that in our assessment. ⢠Verified the disclosures related to provisions and contingent liabilities in the standalone Ind AS financial statements to assess consistency with underlying documents. |
Key audit matter |
How our audit addressed the key audit matter |
|
Tax litigations and recognition of deferred tax assets (as described in Note 9 and 38 of the standalone Ind AS financial statements) |
||
The Company has significant tax litigations for which the Company assesses the outcome on a case-to-case basis considering the underlying facts of each tax litigation. Adverse outcomes could significantly impact the Company''s reported results and balance sheet position. The assessment of outcome of litigations involves significant judgement which is dependent on the facts of each case, supporting judicial precedents and legal opinions of external and internal legal counsels and hence the matter has been considered as a Key Audit Matter. Recognition of deferred tax assets involves the assessment of its recoverability within the allowed time frame requiring significant estimate of the financial projections, availability of sufficient taxable income in the future and also involving significant judgements in the interpretation of tax regulations and tax positions adopted by the Company. Considering the judgement involved in determining the recovery of deferred tax assets, the matter is considered a Key Audit Matter |
Our audit procedures amongst others included the following: ⢠Evaluated the design and tested the operating effectiveness of controls in respect of the identification and evaluation of tax litigations/deferred tax and the recording and re-assessment of the related liabilities/assets and provisions and disclosures. ⢠Obtained list of ongoing tax litigations from management along with their assessment of the cases based on past precedents, judgements and matters in the jurisdiction, legal opinions sought by management, correspondences with tax department etc. ⢠Engaged tax specialists, to evaluate management''s assessment of the outcome of these litigations. Our specialists considered legal precedence and other rulings in evaluating management''s position on these tax litigations ⢠Tested management''s assumptions including forecasts and sensitivity analysis in respect of recoverability of deferred taxes on unabsorbed depreciation/carry forward losses/Minimum Alternate Tax (MAT) credit. ⢠Verified disclosures of the tax positions, tax loss carry forwards and tax litigations in the standalone Ind AS financial statements. |
|
Identification and disclosures of Related Parties (as described |
in |
Note 49 of the standalone Ind AS financial statements) |
The Company has related party transactions which include, amongst others, sale and purchase of goods/services to its subsidiaries, associates, joint ventures and other related parties and lending, investment and borrowing to/from its subsidiaries, associates and joint ventures. Identification and disclosure of related parties was a significant area of focus and hence considered it as a Key Audit Matter. |
Our audit procedures amongst others included the following: ⢠Evaluated the design and tested the operating effectiveness of controls over identification and disclosure of related party transactions. ⢠Obtained a list of related parties from the Company''s management and traced the related parties to declarations given by directors, where applicable, and to Note 49 of the standalone Ind AS financial statements. ⢠Read minutes of the meetings of the Board of Directors and Audit Committee and traced related party transactions with limits approved by Audit Committee / Board. |
|
⢠|
Read declarations of related party transactions given to the Board of Directors and Audit Committee. |
|
⢠|
Verified the disclosures in the standalone Ind AS financial statements for compliance with Ind AS 24. |
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Merger of Sun Pharma Global FZE (as described in Note 54(12) of the standalone Ind AS financial statements) |
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Pursuant to scheme of arrangement in the nature of amalgamation and merger approved by National Company Law Tribunal (âNCLTâ) on August 31, 2021, Sun Pharma Global FZE has been merged with the Company with an appointed date of January 01, 2020. As disclosed in Note 54(12) to the standalone Ind AS financial statements, the merger is accounted for as a business combination under common control. The merger has a significant impact on the standalone Ind AS financial statements of the Company including assets, revenue, results, tax, reserves and comparative numbers. This transaction had a significant effect on the standalone Ind AS financial statements for the year and hence is considered as Key Audit Matter. |
Our audit procedures amongst others included the following: ⢠Evaluated the design and tested the operating effectiveness of the controls over the accounting for business combination. ⢠Obtained the audited financial statements of Sun Pharma Global FZE for the year ended March 31, 2021. ⢠Traced the numbers pertaining to Sun Pharma Global FZE in the restated financial information of the Company for the year ended March 31, 2021 to the audited financial statements of Sun Pharma Global FZE. ⢠Tested the exchange restatements to check mathematical accuracy. ⢠Read the approval obtained from NCLT. ⢠Tested supporting schedules and evidence to ascertain that the accounting is as per the terms of the scheme of arrangement. |
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⢠|
Evaluated the disclosures in the standalone Ind AS financial statements. |
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Other intangible assets (as described in Note 4 of the standalone Ind AS financial statements) |
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The Company has significant intangible assets, comprising acquired trademarks and product intangibles. The Company conducts an annual impairment testing of intangible assets. Significant judgements are used to estimate the recoverable amount of these intangible assets and hence is considered as a Key Audit Matter. |
Our audit procedures amongst others included the following: ⢠Evaluated the design and tested the operating effectiveness of management''s controls in assessing the carrying value of intangible assets. ⢠Obtained the Company''s computation of recoverable amount and tested the mathematical accuracy and reasonableness of key assumptions. ⢠Obtained and evaluated management''s sensitivity analysis to ascertain the impact of changes in key assumptions. |
|
⢠|
Evaluated the disclosures in the standalone Ind AS financial statements. |
AUDITORâS RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS
OTHER INFORMATION
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the standalone Ind AS financial statements and our auditor''s report thereon.
Our opinion on the standalone Ind AS 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 Ind AS financial statements, our responsibility is to read the other information and in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT 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 Act with respect to the preparation of these standalone Ind AS financial statements that 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 (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the 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.
In preparing the standalone Ind AS 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.
Our objectives are to obtain reasonable assurance about whether the standalone Ind AS 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 Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone Ind AS 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 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 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 Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements for the financial year ended March 31, 2022 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.
OTHER MATTER
As fully described in note 54(12) of the Standalone Ind AS financial statements, the Company has prepared these standalone Ind AS financial statements to give effect to the Scheme of arrangement in the nature of amalgamation and merger of Sun Pharma Global FZE with the Company with an appointed date of January 01, 2020. We did not audit the financial statements and other financial information, in respect of Sun Pharma Global FZE, whose Ind AS financial statements, without giving effect to elimination of intra-group transactions included total assets of '' 83,523.4 Million as at March 31, 2021, total income of '' 13,379.1 Million, total net loss after tax of '' 12,973.2 Million and total comprehensive loss of '' 11,889.3 Million for the year ended March 31, 2021 and net cash inflow of '' 343.9 Million for the period from April 01, 2020 to March 31, 2021. These Ind AS financial statements and other financial information have been audited by other auditor whose report has been furnished to us. Our conclusion, in so far as it relates to the amounts and disclosures of Sun Pharma Global FZE is based solely on report of such other auditor. Our conclusion 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, 2020 (the âOrderâ), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the âAnnexure 1â 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 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 the Statement of Other Comprehensive Income, 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 Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(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 these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in âAnnexure 2â to this report;
(g) In our opinion, the managerial remuneration for the year ended March 31, 2022 has been paid
/ provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(h) 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 Ind AS financial statements - Refer Note 38 to the standalone Ind AS financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses,
if any, on long-term contracts including derivative contracts - Refer Note 24 and 28 to the standalone Ind AS financial statements;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company, except a sum of '' 1.2 Million which has been kept in abeyance due to pending legal cases.
iv. (a) The management has represented
that, to the best of its knowledge and belief and read with note 54(21) to the standalone Ind AS financial statements, 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 (âIntermediariesâ), 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 (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(b) The management has represented that, to the best of its knowledge and belief and read with note 54(21) to the standalone Ind AS financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (âFunding 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 (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
(c) Based on such audit procedures that were 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 final dividend paid by the Company during the year in respect of that declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend.
The interim dividend declared and paid by the Company during the year and until the date of this audit report is in accordance with section 123 of the Act.
As stated in note 42 to the standalone Ind AS financial statements, the Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.
For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Paul Alvares
Partner
Membership Number: 105754
UDIN: 22105754AJVRMM8346
Place of Signature: Mumbai
Date: May 30, 2022
Mar 31, 2021
REPORT ON THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS
OPINION
We have audited the accompanying standalone Ind AS financial statements of Sun Pharmaceutical Industries Limited (the âCompanyâ), which comprise the Balance Sheet as at March 31, 2021, the Statement of Profit and Loss, including the Statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone Ind AS financial statements, including a summary of significant accounting policies and other explanatory information.
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 Companies Act, 2013, as amended (the âActâ) 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, 2021, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act.
Our responsibilities under those Standards are further described in the âAuditor''s Responsibilities for the Audit of the Standalone Ind AS Financial Statements'' section of our report. We are independent of the Company in
accordance with the âCode of Ethics'' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the 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 audit opinion on the standalone Ind AS financial statements.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements for the financial year ended March 31, 2021. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. For each key audit matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report.
We have fulfilled the responsibilities described in the âAuditor''s responsibilities for the audit of the standalone Ind AS financial statements'' section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.
Key audit matter |
How our audit addressed the key audit matter |
Litigations (as described in Note 39 of the standalone Ind AS financial statements) |
|
The Company is involved in various legal proceedings including product liability, contracts, employment claims, Department of Justice (DOJ) investigations, anti-trust and other regulatory matters relating to conduct of its business. The Company assesses the need to make provision or to disclose a contingent liability on a case-to-case basis considering the underlying facts of each litigation. The eventual outcome of the litigations is uncertain and estimation at balance sheet date involves extensive judgement of management including input from legal counsel due to complexity of each litigation. Adverse outcomes could significantly impact the Company''s reported profit and balance sheet position. Considering the judgement involved in determining the need to make a provision or disclose as contingent liability, the matter is considered a Key Audit Matter. |
Our audit procedures amongst others included the following: ⢠Evaluated the design and tested the operating effectiveness of controls in respect of the identification, evaluation of litigations, the recording / re-assessment of the related liabilities, provisions and disclosures. ⢠Obtained a list of litigations from the Company''s in-house legal counsel; identified material litigations from the aforementioned list and performed inquiries with the said counsel; obtained and read the underlying documents to assess the assumptions used by management in arriving at the conclusions. ⢠Circulated, obtained and read legal confirmations from Company''s external legal counsels in respect of material litigations and considered that in our assessment. ⢠Verified the disclosures related to provisions and contingent liabilities in the standalone Ind AS financial statements to assess consistency with underlying documents. |
Key audit matter |
How our audit addressed the key audit matter |
Tax litigations and recognition of deferred tax assets (as described in Note 9 and 39 of the standalone Ind AS financial statements) |
|
The Company has significant tax litigations for which the |
Our audit procedures amongst others included the following: |
Company assesses the outcome on a case-to-case basis |
⢠Evaluated the design and tested the operating effectiveness of |
considering the underlying facts of each tax litigation. Adverse |
controls in respect of the identification and evaluation of tax |
outcomes could significantly impact the Company''s reported |
litigations/deferred tax and the recording and re-assessment of |
profit and balance sheet position. |
the related liabilities/assets and provisions and disclosures. |
The assessment of outcome of litigations involves significant |
⢠Obtained list of ongoing tax litigations from management along |
judgement which is dependent on the facts of each case, |
with their assessment of the cases based on past precedents, |
supporting judicial precedents and legal opinions of external |
judgements and matters in the jurisdiction, legal opinions |
and internal legal counsels and hence the matter has been |
sought by management, correspondences with tax department |
considered as a Key Audit Matter. |
etc. |
Recognition of deferred tax assets involves the assessment |
⢠Engaged tax specialists, to evaluate management''s assessment |
of its recoverability within the allowed time frame requiring |
of the outcome of these litigations. Our specialists considered |
significant estimate of the financial projections, availability |
legal precedence and other rulings in evaluating management''s |
of sufficient taxable income in the future and also involving significant judgements in the interpretation of tax regulations |
position on these tax litigations. |
and tax positions adopted by the Company. Considering the |
⢠Tested management''s assumptions including forecasts and |
judgement involved in determining the recovery of deferred tax |
sensitivity analysis in respect of recoverability of deferred taxes |
assets, the matter is considered a Key Audit Matter. |
on unabsorbed depreciation/carry forward losses/MAT credit. ⢠Verified disclosures of the tax positions, tax loss carry forwards and tax litigations in the standalone Ind AS financial statements. |
Identification and disclosures of Related Parties (as described in |
Note 50 of the standalone Ind AS financial statements) |
The Company has related party transactions which include, |
Our audit procedures amongst others included the following: |
amongst others, sale and purchase of goods/services to its |
⢠Evaluated the design and tested the operating effectiveness |
subsidiaries, associates, joint ventures and other related parties |
of controls over identification and disclosure of related party |
and lending and borrowing to its subsidiaries, associates and joint ventures. |
transactions. ⢠Obtained a list of related parties from the Company''s |
Identification and disclosure of related parties was a significant |
management and traced the related parties to declarations |
area of focus and hence considered it as a Key Audit Matter. |
given by directors, where applicable, and to Note 50 of the standalone Ind AS financial statements. ⢠Read minutes of the meetings of the Board of Directors and Audit Committee to trace related party transactions with limits approved by Audit Committee / Board. ⢠Tested material creditors/debtors, loan given/loans taken to evaluate existence of any related party relationships; tested transactions based on declarations of related party transactions given to the Board of Directors and Audit Committee. ⢠Verified the disclosures in the standalone Ind AS financial statements for compliance with Ind AS 24. |
OTHER INFORMATION
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the standalone Ind AS financial statements and our auditor''s report thereon.
Our opinion on the standalone Ind AS 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 Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
; 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 Ind AS financial statements that 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 (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the 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.
In preparing the standalone Ind AS 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.
The Board of Directors are also responsible for overseeing the Company''s financial reporting process.
Our objectives are to obtain reasonable assurance about whether the standalone Ind AS 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 Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone Ind AS 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 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 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 Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements for the financial year ended March 31, 2021 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.
1. As required by the Companies (Auditor''s Report)
Order, 2016 (the âOrderâ), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the âAnnexure 1â a statement on the matters specified in paragraphs 3 anc 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 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 the Statement of Other Comprehensive Income, 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 Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from the directors as on March 31, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021 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 with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate report in âAnnexure 2â to this report;
(g) In our opinion, the managerial remuneration for the year ended March 31, 2021 has been paid
/ provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(h) 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 Ind AS financial statements - Refer Note 39 to the standalone Ind AS financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts -Refer Note 25 and 29 to the standalone Ind AS financial statements;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company, except a sum of INR 1.13 million, which is held in abeyance due to pending legal cases.
For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Paul Alvares
Partner
Membership Number: 105754
UDIN: 21105754AAAACU7233
Place of Signature: Pune
Date: May 27, 2021
Mar 31, 2019
INDEPENDENT AUDITOR''S REPORT
To the Members of Sun Pharmaceutical Industries Limited
REPORT ON THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS
OPINION
We have audited the accompanying standalone Ind AS financial statements of Sun Pharmaceutical Industries Limited ("the Company"), which comprise the Balance sheet as at March 31, 2019, the Statement of Profit and Loss, including the Statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.
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 Companies Act, 2013, as amended ("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, 2019, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs), as 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 Ind AS 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 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 audit opinion on the standalone Ind AS financial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements for the financial year ended March 31, 2019. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. For each key audit matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the ''Auditor''s responsibilities for the audit of the standalone Ind AS financial statements'' section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.
Key audit matter |
How our audit addressed the key audit matter |
Litigations (as described in Note 39 of the standalone Ind AS financial statements) |
|
The Company is involved in various legal proceedings including product liability, contracts, employment claims, anti-trust and other regulatory matters relating to conduct of its business. The Company assesses the need to make provision or to disclose a contingent liability on a case-to-case basis considering the underlying facts of each litigation. |
Our audit procedures amongst others included the following: ⢠Evaluated the design and tested the operating effectiveness of controls in respect of the identification, evaluation of litigations, the recording / re-assessment of the related liabilities, provisions and disclosures. |
The eventual outcome of the litigations is uncertain and estimation at balance sheet date involves extensive judgement of Management including input from legal counsel due to complexity of each litigation. Adverse outcomes could significantly impact the Company''s reported profit and balance sheet position. |
⢠Obtained a list of litigations from the Company''s in-house legal counsel; identified material litigations from the aforementioned list and performed inquiries with the said counsel; obtained and read the underlying documents to assess the assumptions used by management in arriving at the conclusions. |
Considering the judgement involved in determining the need to make a provision or disclose as contingent liability, the matter is considered a key audit matter. |
|
Key audit matter |
How our audit addressed the key audit matter |
⢠Read legal confirmations from Company''s external legal counsels in respect of material litigations and considered that in our assessment. |
|
⢠Read the disclosures related to provisions and contingent liabilities in the standalone Ind AS financial statements to assess consistency with underlying documents. |
|
Tax litigations and recognition of deferred tax assets (as described in Note 9 and 39 of the standalone Ind AS financial statements) |
|
The Company has significant tax litigations for which the Company assesses the outcome on a case-to-case basis considering the underlying facts of each tax litigation. Adverse outcomes could significantly impact the Company''s reported profit and balance sheet position. |
Our audit procedures amongst others included the following: ⢠Evaluated the design and tested the operating effectiveness of controls in respect of the identification and evaluation of tax litigations/deferred tax and the recording and re-assessment of the related liabilities/assets and provisions and disclosures. |
The assessment of outcome of litigations involves significant judgement which is dependent on the facts of each case, supporting judicial precedents and legal opinions of external and internal legal counsels. |
⢠Engaged tax specialists, to evaluate management''s assessment of the outcome of these litigations. ⢠Our specialists considered legal precedence and other rulings in evaluating management''s position on these tax litigations. |
Also, recognition of deferred tax assets is a key audit matter as the assessment of its recoverability within the allowed time frame involves significant estimate of the financial projections, availability of sufficient taxable income in the future and also involves significant judgements in the interpretation of tax regulations and tax positions adopted by the Company. |
⢠Tested management''s assumptions including forecasts and sensitivity analysis in respect of recoverability of deferred taxes on unabsorbed depreciation/carry forward losses. ⢠Evaluated disclosures of the tax positions, tax loss carry forwards and tax litigations in the standalone Ind AS financial statements. |
Merger of specified business of Sun Pharma Global FZE (as described in Note 56(11) of the standalone Ind AS financial statements) |
|
On December 01, 2018 the Company completed the demerger of the specified business of Sun Pharma Global FZE ("Sun FZE") and its merger into Sun Pharmaceutical Industries Limited. As disclosed in Note 56(11) to the standalone Ind AS financial statements, the merger is accounted for as a business combination under common control. The merger has a significant impact on the standalone Ind AS financial statements of the Company including revenue, profit, tax, reserves and comparative numbers. We focused on this area considering that this was a significant event during the year. |
Our audit procedures amongst others included the following: ⢠Evaluated the design and tested the operating effectiveness of the controls over the accounting for business combination. ⢠Instructed auditors of Sun Pharma Global FZE to perform specific audit procedures in respect of carve out of assets and liabilities pertaining to specified business of Sun Pharma Global FZE as at April 01, 2018 prepared by management and obtained their audit report on the carved out financial statements. ⢠Traced the previous year (March 31, 2018) restated financial information of the Company to the carve out audited financial information of Sun FZE for the year ended March 31, 2018. ⢠Tested the exchange restatements to check mathematical accuracy. ⢠Read the approval obtained from National Company Law Tribunal (NCLT). ⢠Tested supporting workings and evidence relating to the accounting as per the terms of the scheme of arrangement. ⢠Evaluated the disclosures in the standalone Ind AS financial statements. |
Identification and disclosures of Related Parties (as described in Note 51 of the standalone Ind AS financial statements) |
|
The Company has related party transactions which include, amongst others, sale and purchase of goods/services to its subsidiaries, associates, joint ventures and other related parties and lending and borrowing to its subsidiaries, associates and joint ventures. We focused on identification and disclosure of related parties in accordance with relevant accounting standards as a key audit matter. |
Our audit procedures amongst others included the following: ⢠Evaluated the design and tested the operating effectiveness of controls over identification and disclosure of related party transactions. ⢠Obtained a list of related parties from the Company''s Management and traced the related parties to declarations given by directors, where applicable, and to Note 51 of the standalone Ind AS financial statements. |
Key audit matter |
How our audit addressed the key audit matter |
⢠Read minutes of the meetings of the Board of Directors and Audit Committee. |
|
⢠Tested material creditors/debtors, loan outstanding/loans taken to evaluate existence of any related party relationships; tested transactions based on declarations of related party transactions given to the Board of Directors and Audit Committee. |
|
⢠Evaluated the disclosures in the standalone Ind AS financial statements for compliance with Ind AS 24. |
|
Transition of business from Aditya Medisales Limited (as described in Note 56(12) of the standalone Ind AS financial statements) |
|
The Company has announced transition of the Indian Domestic Formulation distribution business from Aditya Medisales Limited ("AML"), a related party, to a wholly owned subsidiary of the Group. As part of the transition, the Company has taken back its unsold inventory lying with AML as on March 31, 2019. We focused on this area considering that this was a significant event during the year and being a transaction with a related party. |
Our audit procedures amongst others included the following: ⢠Evaluated the design and tested the operating effectiveness of the controls over the accounting of this transaction. ⢠Performed count of the physical inventory taken back from AML by the Company as at March 31, 2019 on a test check basis. |
⢠Tested the working for valuation of such inventory on a sample basis. |
|
⢠Traced the closing receivable balance with the confirmation received from AML. |
|
⢠Tested supporting workings and evidences related to accounting. |
|
⢠Evaluated the disclosures in the standalone Ind AS financial statements. |
OTHER INFORMATION
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the standalone Ind AS financial statements and our auditor''s report thereon.
Our opinion on the standalone Ind AS 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 Ind AS financial statements, our responsibility is to read the other information and in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT 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 Act with respect to the preparation of these standalone Ind AS financial statements that 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 (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the 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.
In preparing the standalone Ind AS 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.
The Board of Directors are also responsible for overseeing the Company''s financial reporting process.
AUDITOR''S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the standalone Ind AS 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 Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone Ind AS 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 system in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of management''s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone Ind AS 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 Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements for the financial year ended March 31, 2019 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.
OTHER MATTER
As fully described in Note 56(11) of the standalone Ind AS financial statements, the Company has prepared these standalone Ind AS financial statements to give effect to the Scheme of arrangement of demerger of the specified undertaking of Sun Pharma Global FZE into the Company with an appointed date of April 01, 2017. We did not audit total assets of Rs. 26,758.1 million as at March 31, 2018 and total revenues of Rs. 13,388.1 million for the year ended March 31, 2018, included in the accompanying standalone Ind AS financial statements (as part of previous year ended March 31, 2018) in respect of the specified undertaking of Sun Pharma Global FZE whose financial statements and other information has been audited by other auditor and whose report has been furnished to us. Our opinion, in so far as it relates to the affairs of the specified undertaking is based solely on the report of other auditor. 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, 2016 ("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 1" 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 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 the Statement of Other Comprehensive Income, 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 Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(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 over financial reporting of the Company with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate report in "Annexure 2" to this report;
(g) In our opinion, the managerial remuneration for the year ended March 31, 2019 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(h) 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 Ind AS financial statements - Refer Note 39 to the standalone Ind AS financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 25 and 29 to the standalone Ind AS financial statements;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company, except a sum of Rs. 3.2 Million, which is held in abeyance due to pending legal cases.
For S R B C & CO LLP Chartered Accountants ICAI Firm Registration No. : 324982E/E300003 per PAUL ALVARES Partner Membership No. : 105754 Place of Signature: Mumbai Date: May 28, 2019 |
Annexure 1 referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date
RE: SUN PHARMACEUTICAL INDUSTRIES LIMITED (''THE COMPANY'')
i. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) All fixed assets have not been physically verified by management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.
(c) According to the information and explanations given by management, the title deeds of immovable properties, included in property, plant and equipment are held in the name of the Company, except for the following immovable properties for which registration of title deeds is in process:
Type of asset |
Total number of cases |
Gross Block as on March 31, 2019 (Rs Million) |
Net Block as on March 31, 2019 (Rs Million) |
Remarks |
Freehold Land including building located thereon |
10 |
358.4 |
344.9 |
The title deeds are in the name of erstwhile companies that |
Leasehold Land |
5 |
500.7 |
480.9 |
were merged with the Company under relevant provisions of the Companies Act, 1956/2013 in terms of approval of the Honorable High Courts of respective states. |
In respect of building where the Company is entitled to the right of occupancy and use and disclosed as property, plant and equipment in the standalone Ind AS financial statements, we report that the instrument entitling the right of occupancy and use of building, are in the name of the Company as at the balance sheet date.
(ii) The inventory has been physically verified by management during the year. In our opinion, the frequency of verification is reasonable. No material discrepancies were noticed on such physical verification. Inventories lying with third parties have been confirmed by them and no material discrepancies were noticed in respect of such confirmations.
(iii) According to the information and explanations given to us, 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. Accordingly, the provisions of clause 3(iii) (a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 186 of the Act in respect of loans, making investments and providing guarantees and securities as applicable. During the year, the Company has not granted any loans to parties covered under section 185 of the Act.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable to the Company and hence not commented upon.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, related to the manufacture of pharmaceutical products, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.
(vii)(a) Undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, goods and service tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income-tax, service tax, sales-tax, duty of custom, duty of excise, value added tax, goods and service tax, cess and other statutory dues, where applicable were outstanding, at the year end, for a period of more than six months from the date they became payable.
(c) According to the records of the Company, the dues of income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, goods and service tax and cess, wherever applicable and which have not been deposited on account of any dispute, are as follows:
Name of the Statute |
Nature of dues |
Forum where the dispute is pending |
Year to which it pertains |
Amount (Rs. Million)* |
Income Tax Act, 1961 |
Income Tax, Interest, and Penalty |
Commissioner (Appeals) |
Various years from 2007-08 to 2014-15 |
128.69 |
Income Tax Act, 1961 |
Income Tax and Interest |
Income Tax Appellate Tribunal (ITAT) |
Various years from 1995-96 to 2011-12 |
17,048.74 |
Sales Tax Act/VAT (Various States) |
Sales Tax, Interest and Penalty |
Assistant / Additional /Senior Joint Commissioner |
Various years from 1999-00 to 2015-16 |
31.05 |
Sales Tax Act/VAT (Various States) |
Sales Tax, Interest and Penalty |
Appellate Authority |
Various years from 1998-99 to 2015-16 |
14.93 |
Sales Tax Act/VAT (Various States) |
Sales Tax, Interest and Penalty |
Tribunal |
Various years from 1998-99 to 2009-10 |
5.62 |
Sales Tax Act/VAT (Various States) |
Sales Tax, Interest and Penalty |
High Court |
Various years from 1999-00 to 2010-11 |
51.09 |
The Central Excise Act, 1944 |
Service Tax |
Assistant / Additional /Senior Joint Commissioner |
Various years from 2013-14 to 2016-17 |
1.40 |
The Central Excise Act, 1944 |
Service Tax |
Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi |
Various years from 2006-07 to 2015-16 |
52.16 |
The Central Excise Act, 1944 |
Excise Duty, Interest and Penalty |
CESTAT |
Various years from 2003-04 to 2015-16 |
1,143.83 |
The Central Excise Act, 1944 |
Excise Duty, Interest and Penalty |
Commissioner (Appeals) |
Various years from 2003-04 to 2016-17 |
41.68 |
The Central Excise Act, 1944 |
Excise Duty, Interest and Penalty |
High Court |
Various years from 2003-04 to 2013-14 |
38.36 |
Customs Act, 1962 |
Customs Duty, Penalty and Interest |
CESTAT |
Various years from 2008-09 to 2014-15 |
115.97 |
Customs Act, 1962 |
Customs Duty, Penalty and Interest |
Commissioner (Appeals) |
Various years from 2010-11 to 2012-13 |
21.62 |
*Amount includes interest till the date of demand and are net of advances paid/adjusted under protest.
viii) ln our opinion and according to the information and explanations given by management, the Company has not defaulted in repayment of loans or borrowing to a financial institution, bank or Government. The Company did not have any outstanding dues to debenture holders during the year.
(ix) In our opinion and according to the information and explanations given by management, the Company has utilized the monies raised by way of term loans for the purposes for which they were raised. The Company did not raise any money by way of initial public offer / further public offer/ debt instruments.
(x) Based upon the audit procedures performed for the purpose of reporting true and fair view of the financial statements and according to the information and explanations given by management, we report that no fraud by the Company or no material fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.
(xi) According to the information and explanations given by management, managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.
(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the standalone Ind AS financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) of the Order are not applicable to the Company and hence not commented upon.
(xv)According to the information and explanations given by management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Act.
(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
For S R B C & CO LLP Chartered Accountants ICAI Firm Registration No. : 324982E/E300003 |
per PAUL ALVARES Partner Membership No. : 105754 |
Place of Signature: Mumbai Date: May 28, 2019 |
Annexure 2 to the Independent Auditor''s Report of even date on the Standalone Ind AS Financial Statements of Sun Pharmaceutical Industries Limited
REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT, 2013 ("THE ACT")
We have audited the internal financial controls over financial reporting of Sun Pharmaceutical Industries Limited ("the Company") as of March 31, 2019 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. 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 the 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.
AUDITOR''S RESPONSIBILITY
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting with reference to these standalone Ind AS 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 "Guidance Note") and the Standards on Auditing as specified under section 143(10) of the Act, to the extent 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 with reference to these standalone Ind AS financial statements 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 over financial reporting with reference to these standalone Ind AS financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these standalone Ind AS 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 auditor''s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls over financial reporting with reference to these standalone Ind AS financial statements.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING WITH REFERENCE TO THESE FINANCIAL STATEMENTS
A company''s internal financial control over financial reporting with reference to these standalone Ind AS 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 company''s internal financial control over financial reporting with reference to these standalone Ind AS 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 company''s assets that could have a material effect on the financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING WITH REFERENCE TO THESE FINANCIAL STATEMENTS
Because of the inherent limitations of internal financial controls over financial reporting with reference to these standalone Ind AS 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 over financial reporting with reference to these standalone Ind AS financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these standalone Ind AS financial statements 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, adequate internal financial controls over financial reporting with reference to these standalone Ind AS financial statements and such internal financial controls over financial reporting with reference to these standalone Ind AS 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.
For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration No.: 324982E/E300003
per PAUL ALVARES
Partner
Membership No.: 105754
Place of Signature: Mumbai
Date: May 28, 2019
Mar 31, 2018
Independent Auditor''s Report
To the Members of Sun Pharmaceutical Industries Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of Sun Pharmaceutical Industries Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss, including the statement of 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.
Managementâs 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 (âthe Actâ) with respect to the preparation of these standalone Ind AS financial statements that 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 accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act., read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs 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, issued by the Institute of Chartered Accountants of India, as 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 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 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 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 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, its loss including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Other Matter
The Ind AS financial statements of the Company for the year ended March 31, 2017, included in these standalone Ind AS financial statements, have been audited by the predecessor auditor who expressed an unmodified opinion on those statements on May 26, 2017.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s 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 1 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, Statement of Profit and Loss including the Statement of Other Comprehensive Income, 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 Accounting Standards specified under section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of written representations received from the directors as on March 31, 2018, and 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 over financial reporting of the Company with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in âAnnexure 2â to this report;
(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 40 to the standalone Ind AS financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 25 and 30 to the standalone Ind AS financial statements
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company, except a sum of '' 16.9 Million, which is held in abeyance due to pending legal cases.
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.
(c) According to the information and explanations given by the management, the title deeds of immovable properties, included in property, plant and equipment are held in the name of the Company, except for the following immovable properties for which registration of title deeds is in process:
Particulars of Freehold Land and building |
Gross Block ('' in millions) |
Net Block ('' in millions) |
Remarks |
Freehold Land located in Himachal Pradesh |
76.3 |
76.3 |
The title deeds are in the name of Ranbaxy Laboratories Limited, erstwhile company that was |
Freehold Land located in Punjab |
27.2 |
27.2 |
merged with the Company under Sections 391 to 394 |
Freehold Land located in Haryana |
109.0 |
109.0 |
of the Companies Act, 1956 in terms of the approval |
Freehold Land located in Madhya Pradesh |
5.8 |
5.8 |
of the Honourable High Courts of Gujarat and of Punjab and Haryana. |
Freehold Land located in Karnataka |
28.3 |
28.3 |
|
Freehold Land located in Punjab |
2.5 |
2.5 |
The title of this land is under dispute in respect of which we have been informed by the Management of the Company that they have filed a Special Leave Petition with the Honourable Supreme Court against the order passed by the Honourable High Court of Punjab and Haryana and the matter is under adjudication. |
Freehold Land located in Chennai |
11.3 |
7.7 |
The titles are in the name of Tamilnadu Dadha Pharmaceuticals Limited / Pradeep Drug Company Limited, erstwhile companies that were merged with the Company under Sections 391 to 394 of the Companies Act, 1956 in terms of the approval of the Honourable High Courts of Gujarat and of Tamilnadu / order of the New Delhi Bench of Board of Industrial and Financial Reconstruction respectively. |
Land and Building situated at Village Bhatauli Kalan, PO Barotiwala, Nalagarh, District Solan (HP) Land and Building situated at Vill. Bhatauli Kalan, PO Barotiwala , Nalagarh, District Solan (HP) |
122.7 |
86.2 |
The title deeds are in the name of Solrex Pharmaceuticals, erstwhile Partnership firm that was merged with the Company under Sections 230 to 232 of the Companies Act, 2013. |
In respect of building where the Company is entitled to the right of occupancy and use and disclosed as property, plant and equipment in the standalone Ind AS financial statements, we report that the agreement / non-convertible preference shares / compulsorily convertible debentures entitling the right of occupancy and use of building, are in the name of the Company as at the balance sheet date.
In respect of immovable properties of land and buildings that have been taken on lease and disclosed as property, plant and equipment in the standalone Ind AS financial statements, the lease agreements are in the name of the Company, where the Company is the lessee in the agreement, except for the following:
Particulars of Leasehold Land |
Cost or deemed cost as at 31st March 2018 ('' in millions) |
Carrying amount as at 31st March 2018 ('' in millions) |
Remarks |
Located In Maharashtra |
17.4 |
17.1 |
The lease agreements are in the name of Crosslands Research Laboratories Limited which was merged with Ranbaxy |
Located in Goa |
2.7 |
2.6 |
Laboratories Limited, erstwhile company that was merged with the Company under Sections 391 to 394 of the Companies Act, 1956 in terms of the approval of the Honourable High Courts of Gujarat and of Punjab and Haryana. |
Located in Punjab. |
213.2 |
205.9 |
The lease agreements are in the name of Ranbaxy Laboratories |
Located in Madhya Pradesh. |
222.4 |
215.5 |
Limited, erstwhile company that was merged with the Company under Sections 391 to 394 of the Companies Act, 1956 in terms of the approval of the Honourable High Courts of Gujarat and of Punjab and Haryana. |
Located in Gujarat |
0.7 |
0.3 |
The lease agreements are in the name of Gujarat Lyca Limited, erstwhile company that was merged with the Company under Sections 391 to 394 of the Companies Act, 1956 in terms of the approval of the Honourable High Courts of Gujarat. |
(ii) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. No material discrepancies were noticed on such physical verification. Inventories lying with third parties have been confirmed by them and no material discrepancies were noticed in respect of such confirmations.
(iii) (a) The Company has granted loans to one Company covered in the register maintained under section 189 of the Companies Act,
2013. In our opinion and according to the information and explanations given to us, the terms and conditions of the grant of such loans are not prejudicial to the Company''s interest.
(b) The Company has granted loans that are re-payable on demand, to a firm covered in the register maintained under section 189 of the Companies Act, 2013. The schedule of repayment of principal and payment of interest has been stipulated for the loans granted and the repayment/receipts are regular.
(c) There are no amounts of loans granted to companies, firms or other parties listed in the register maintained under section 189 of the Companies Act, 2013 which are overdue for more than ninety days.
(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 186 of the Act in respect of grant of loans, making investments and providing guarantees and securities as applicable. During the year, the Company has not granted any loans covered under Section 185 of the Act.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, related to the manufacture of pharmaceutical products, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.
(vii) (a) Undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, goods and service tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employeesâ state insurance, income-tax, service tax, sales-tax, duty of custom, duty of excise, value added tax, goods and service tax, cess and other statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.
(c) According to the records of the Company, the dues of income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax and cess on account of any dispute, are as follows:
Name of the statute |
Nature of dues |
Forum where the dispute is pending |
Period to which the amount relates |
Amount* ('' in Million) |
Income Tax Act, |
Income Tax, |
Income Tax Appellate Tribunal (ITAT) |
1995-96, 2007-08, 2009-10 |
20,308.4 |
1961 |
Interest and |
to 2011-12 |
||
penalty |
Commissioner (Appeals) |
2003-04, 2013-14, 2014-15 |
10,517.1 |
|
Sales Tax Act/VAT |
Sales Tax, |
Assistant / Additional /Senior Joint |
1999-00, 2000-01, 2003-04, 2004-05 & |
31.8 |
(Various States) |
Interest and |
Commissioner |
2013-14 to 2015-16 |
|
Penalty |
Appellate Authority |
1998-99, 2008-09, 2014-15 & 2015-16 |
14.9 |
|
Tribunal |
1998-99 to 2003-04, 2008-09 & 2009-10 |
5.7 |
||
High Court |
1999-00 to 2010-11 |
53.2 |
||
The Central Excise |
Service Tax |
Assistant / Additional /Senior Joint |
2006-07 to 2015-16 |
46.6 |
Act, 1944 |
Commissioner |
|||
Customs, Excise and Service Tax |
2012-13 to 2014-15 |
3.1 |
||
Appellate Tribunal (CESTAT), Delhi |
||||
Customs Act, |
Customs Duty, |
Commissioner (Appeals) |
2008-09 to 2012-13 & 2014-15 |
21.6 |
1962 |
Penalty and Interest |
CESTAT |
2010-11, 2011-12 & 2012-13 |
116.0 |
The Central Excise |
Excise Duty, |
CESTAT |
2003-04 to 2015-16 |
1,162.4 |
Act, 1944 |
Interest and |
Commissioner (Appeals) |
2003-04 to 2016-17 |
80.8 |
Penalty |
High Court |
2003-04 to 2005-06 & 2008-09 to |
63.2 |
|
2013-14 |
* Net of amount paid / adjusted under protest. Amount included herein includes interest till the date of the order.
(viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowing to a financial institution, bank or government. The Company did not have any outstanding dues to debenture holders during the year.
(ix) In our opinion and according to the information and explanations given by the management, the Company has utilized the monies raised by way term loans for the purposes for which they were raised. The Company has not raised any money way of initial public offer / further public offer / debt instruments.
(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or no material fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.
(xi) According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.
(xii) In our opinion, the Company is not a nidhi Company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and, not commented upon.
(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Companies Act, 2013.
(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 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 (âthe Actâ)
We have audited the internal financial controls over financial reporting of Sun Pharmaceutical Industries Limited (âthe Companyâ) 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.
Managementâs 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. 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 the 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.
Auditorâs Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting with reference to these standalone 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 as specified under section 143(10) of the Companies Act, 2013, to the extent 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 with reference to these standalone financial statements 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 over financial reporting with reference to these standalone financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these standalone 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 auditor''s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls over financial reporting with reference to these standalone financial statements.
Meaning of Internal Financial Controls over Financial Reporting with Reference to these Financial Statements
A company''s internal financial control over financial reporting with reference to these standalone 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 company''s internal financial control over financial reporting with reference to these standalone 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 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 with Reference to these Standalone Financial Statements
Because of the inherent limitations of internal financial controls over financial reporting with reference to these standalone 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 over financial reporting with reference to these standalone financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these standalone financial statements 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, adequate internal financial controls over financial reporting with reference to these standalone financial statements and such internal financial controls over financial reporting with reference to these standalone financial statements 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.
For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration No.: 324982E/E300003
per PAUL ALVARES
Partner
Membership No.: 105754
Place: Mumbai
Date: May 25, 2018
Mar 31, 2017
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of Sun Pharmaceutical Industries Limited (âthe Companyâ), 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 the significant accounting policies and other explanatory information.
Managementâs Responsibility for the Standalone Ind AS Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone Ind AS financial statements that 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 (Ind AS) prescribed 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 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.
Auditorâs Responsibility
Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.
In conducting 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 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 auditorâs 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 Companyâs 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 Companyâs Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.
We believe that the audit evidence obtained by us 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, of the state of affairs of the Company as at 31st March, 2017, and its loss, total comprehensive loss, its cash flows and the changes in equity for the year ended on that date.
Emphasis of Matter
We draw attention to Note 59(11) to the standalone Ind AS financial statements. As referred to in the said Note: Remuneration to the Managing Director and the Whole-time Director(s) of the Company for the years ended 31st March, 2015, 31st March, 2016 and 31st March, 2017 are higher by Rs.49.6 Million, Rs.29.6 Million and Rs.44.7 Million respectively than the amounts approved by the Central Government of India (Ministry of Corporate Affairs) on applications made by the Company to approve the maximum remuneration as approved by the members of the Company for the three years ended 31st March, 2017, in excess of the limits specified under Schedule V to the Act, in case of inadequacy of profits. The Management of the Company have re-represented to the office of the Ministry of Corporate Affairs for approval of remuneration within the overall limits approved by the members of the Company for the years ended 31st March, 2015 and 31st March, 2016, and for the year ended 31st March, 2017, applications for revision in the remuneration, as approved by the members of the Company, has been made to the Ministry of Corporate Affairs. The responses in respect of the foregoing re-representation / applications for revision are awaited from the Ministry of Corporate Affairs.
Our opinion is not modified in respect of this matter.
Other Matter
The transition date opening balance sheet of the Company as at 1st April, 2015 include the financial information of erstwhile Ranbaxy Laboratories Limited, consequent to its amalgamation into the Company which was effected on 24th March, 2015, with the appointed date of 1st April, 2014 [refer Note 59(4) to the standalone Ind AS financial statements]. The said financial information included in these standalone Ind AS financial statements are based on financial information previously prepared in accordance with the Companies (Accounting Standards) Rules, 2006, audited by the other auditors, and have been restated to comply with Ind AS. Adjustments made to the financial information previously prepared in accordance with the Companies (Accounting Standards) Rules, 2006 to comply with Ind AS have been audited by us.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act, based on our audit we report, to the extent applicable 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 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 the 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 âAnnexure Aâ. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companyâs internal financial controls over financial reporting.
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, 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 Ind AS financial statements - Refer Note 40(i) to the standalone Ind AS financial statements.
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Notes 25 and 30 to the standalone Ind AS financial statements.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company except a sum of Rs.13.4 Million, which is held in abeyance due to pending legal cases.
iv. The Company has provided requisite disclosures in Note 56 to the standalone Ind AS financial statements as regards its holding and dealings in Specified Bank Notes as defined in the Notification S.O. 3407(E) dated 8th November, 2016 of the Ministry of Finance, during the period from 8th November, 2016 to 30th December, 2016. Based on audit procedures performed and the representations provided to us by the Management of the Company, we report that the disclosures are in accordance with the books of account maintained by the Company and as produced to us by the Management of the Company.
2. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government in terms of Section 143(11) of the Act, we give in âAnnexure Bâ a statement on the matters specified in paragraphs 3 and 4 of the Order.
ANNEXURE âBâ TO THE INDEPENDENT AUDITORâS REPORT
(Referred to in paragraph 2 under âReport on Other Legal and Regulatory Requirementsâ section of our report of even date to the Members of Sun Pharmaceutical Industries Limited)
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has a program of verification of fixed assets to cover all the items in a phased manner 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 program, certain fixed assets were physically verified by the Management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and the records examined by us and based on the examination of the registered sale deed / transfer deed / conveyance deed / agreement for sale along with registered power of attorney / consent terms taken on record by the Honorable Bombay City Civil Court at Bombay / share certificate / other documents evidencing title provided to us, we report that, the title deeds, comprising all the immovable properties of freehold land and buildings, are held in the name of the Company as at the balance sheet date, except the following:
Particulars of the freehold land and building |
Cost or deemed cost as at 31st March, 2017 (Rs. in Million) |
Carrying amount as at 31st March, 2017 (Rs. in Million) |
Remarks |
Freehold land located in Himachal Pradesh admeasuring 645,150 Square metres |
76.3 |
76.3 |
The title deeds are in the name of Ranbaxy Laboratories Limited, erstwhile company that was merged with the Company under Sections 391 to 394 of the Companies Act, 1956 in terms of the approval of the Honorable High Courts of Gujarat and of Punjab and Haryana. |
Freehold land located in Punjab admeasuring 370,527 Square metres |
27.2 |
27.2 |
|
Freehold land located in Haryana admeasuring 64,161 Square metres |
109.0 |
109.0 |
|
Freehold land located in Madhya Pradesh admeasuring 91,330 Square metres |
5.8 |
5.8 |
|
Freehold land located in Karnataka admeasuring 30,362 Square metres |
28.3 |
28.3 |
|
Freehold land located in Punjab admeasuring 8,364 Square metres |
2.5 |
2.5 |
The title of this land is under dispute in respect of which we have been informed by the Management of the Company that they have filed a Special Leave Petition with the Honorable Supreme Court against the order passed by the Honorable High Court of Punjab and Haryana and the matter is under adjudication. |
Freehold land located in Chennai admeasuring 71,747 Square metres and building thereon |
11.3 |
10.2 |
The titles are in the name of Tamilnadu Dadha Pharmaceuticals Limited / Pradeep Drug Company Limited, erstwhile companies that was merged with the Company under Sections 391 to 394 of the Companies Act, 1956 in terms of the approval of the Honorable High Courts of Gujarat and of Tamilnadu / order of the New Delhi Bench of Board of Industrial and Financial Reconstruction respectively. |
In respect of a building where the Company is entitled to the right of occupancy and use and disclosed as fixed assets in the standalone Ind AS financial statements, we report that the agreement / non-convertible preference shares / compulsorily convertible debentures entitling the right of occupancy and use of building, are in the name of the Company as at the balance sheet date.
In respect of immovable properties of land and buildings that have been taken on lease and disclosed as fixed assets in the standalone Ind AS financial statements, the lease agreements are in the name of the Company, where the Company is the lessee in the agreement, except for the following:
Particulars of the leasehold land |
Cost or deemed cost as at 31st March, 2017 (Rs. in Million) |
Carrying amount as at 31st March, 2017 (Rs. in Million) |
Remarks |
Located in Maharashtra admeasuring 20,000 Square metres. ârepresents composite consideration for land and building. |
* 17.4 |
16.6 |
The lease agreements are in the name of Crosslands Research Laboratories Limited which was merged with Ranbaxy Laboratories Limited, erstwhile company that was merged with the Company under Sections 391 to 394 of the Companies Act, 1956 in terms of the approval of the Honorable High Courts of Gujarat and of Punjab and Haryana. |
Located in Goa admeasuring 18,450 Square metres |
2.7 |
2.6 |
|
Located in Punjab admeasuring 323,866 Square metres |
213.2 |
208.3 |
The lease agreements are in the name of Ranbaxy Laboratories Limited, erstwhile company that was merged with the Company under Sections 391 to 394 of the Companies Act, 1956 in terms of the approval of the Honorable High Courts of Gujarat and of Punjab and Haryana. |
Located in Madhya Pradesh admeasuring 630,552 Square metres |
222.4 |
217.8 |
|
Located in Gujarat admeasuring 24,000 Square metres |
0.7 |
0.6 |
The lease agreement is in the name of Gujarat Lyca Limited, erstwhile company that was merged with the Company under Sections 391 to 394 of the Companies Act, 1956 in terms of the approval of the Honorable High Court of Gujarat. |
(ii) As explained to us, the inventories, excluding stocks with some of the third parties, were physically verified during the year by the Management at reasonable intervals and no material discrepancies were noticed on physical verification. In respect of inventories lying with third parties, these have substantially been confirmed by them.
(iii) In respect of loans, secured or unsecured, granted by the Company to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013 (âthe Actâ):
(a) In our opinion and according to the information given to us, the terms and conditions of the grant of such loan is, in our opinion, prima facie, not prejudicial to the interest of the Company.
(b) In respect of loans granted to a wholly owned subsidiary, where the aggregate amount involved is Rs.4.8 Million (including interest accrued), the repayments or receipts of principal amounts and interest, where due during the year, have been regular as per stipulations and in respect of loans granted to an associate, there is no repayment or receipt of the principal amount of Rs.512.0 Million and the interest thereon of Rs.214.9 Million, which are overdue as per the stipulations.
(c) There is no overdue amount remaining outstanding as at the balance sheet date except in respect of amounts of Rs.512.0 Million and Rs.199.1 Million of principal and interest respectively, aggregating to Rs.711.1 Million, given to an associate, which has been overdue for more than 90 days, where there is no evidence of reasonable steps having been taken for the recovery of the principal outstanding or interest receivable. As represented by the Management of the Company, the Company is evaluating various options to recover its dues in respect of the principal amount and interest.
Refer Note 59(1) to the standalone Ind AS financial statements.
(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 186 of the Act in respect of grant of loans, making investments and providing guarantees and securities, as applicable. During the year, the Company has not granted any loans covered under Section 185 of the Act.
(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit from the public in accordance with the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed thereunder and hence reporting under clause (v) of paragraph 3 of the Order is not applicable.
(vi) The maintenance of cost records has been specified by the Central Government under sub-section (1) of Section 148 of the Act. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended, prescribed by the Central Government under sub-section (1) of Section 148 of the Act, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us, in respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employeesâ State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value added Tax, Cess and other material statutory dues applicable to it with the appropriate authorities, though there have been slight delays in few cases.
(b) There were no undisputed amounts payable in respect of Provident Fund, Employeesâ State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value added Tax, Cess and other material statutory dues in arrears as at 31st March, 2017 for a period of more than six months from the date they became payable.
(c) Details of dues of Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Value added Tax which have not been deposited as at 31st March, 2017 on account of disputes, are given below:
Name of Statute |
Nature of Dues |
Forum where dispute is pending |
Period to which the amount relates |
Amount involved (Rs. in Million)# |
Amount paid / adjusted under protest (Rs. in Million) |
Income Tax Act, |
Income Tax, |
Commissioner (Appeals) |
2003-04, 2005-06, 2006-07, 2010- |
2,617.2 |
3,923.6 |
1961 |
Interest and Penalty |
11 and 2012-13 |
|||
Income Tax Appellate |
1995-96 and 2007-08 to 2011-12 |
27,193.9 |
11,828.5 |
||
Tribunal (ITAT) |
|||||
Sales Tax Act/ |
Sales Tax, Interest |
Assistant / Additional / |
1999-00, 2000-01, 2003-04, 2004- |
24.8 |
2.1 |
VAT (Various |
and Penalty |
Senior Joint Commissioner |
05, 2013-14 and 2014-15 |
||
States) |
Appellate Authority |
1998-99, 2008-09, 2012-13 to 2014-15 |
7.2 |
3.1 |
|
Tribunal |
1998-99 to 2003-04, 2008-09 and 2014-15 |
6.1 |
2.3 |
||
High Court |
1999-00, 2001-02 to 2003-04 and 2005-06 to 2010-11 |
53.2 |
6.4 |
||
Entry Tax |
Madhya Pradesh Commercial Tax Appellate Board |
2009-10 |
2.5 |
||
The Central |
Service Tax |
Customs, Excise and |
2006 to 2015 |
49.7 |
6.8 |
Excise Act, |
Service Tax Appellate |
||||
1944 |
Tribunal (CESTAT), Delhi |
||||
Customs Act, |
Customs Duty, |
Commissioner (Appeals) |
2014-15 |
13.8 |
10.8 |
1962 |
Penalty and Interest |
||||
CESTAT |
2015-16 |
118.7 |
- |
||
The Central |
Excise Duty, |
Settlement Commission |
2000-01 |
4.2 |
- |
Excise Act, |
Interest and |
||||
1944 |
Penalty |
||||
Commissioner |
2001-02 to 2015-16 |
50.2 |
5.3 |
||
(Appeals) |
|||||
Tribunal |
2002-03 to 2014-15 |
1,783.6 |
449.5 |
||
High Court |
2002-03 to 2014-15 |
70.9 |
9.7 |
# Net of amount paid / adjusted under protest
(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions, banks and government. The Company has not issued any debentures.
(ix) In our opinion and according to the information and explanations given to us, money raised by way of the term loans have been applied by the Company during the year for the purposes for which they were raised. The Company has not raised money by way of initial public offer, further public offer (including debt instruments) during the year.
(x) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company by its officers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us, the Company has paid managerial remuneration in excess of the limits and approvals prescribed under Section 197 read with Schedule V to the Act, to the following managerial personnel:
Managerial Position |
Excess amount of remuneration paid (Rs. in Million) |
Financial year ended |
Treatment of the excess remuneration in the respective year standalone financial statements |
Steps taken by the Company for securing refund |
Managing Director |
22.9 |
31st March, 2015 |
Charged to the Statement of |
We have been informed by the Management |
|
Profit and Loss |
of the Company that they have re-represented to the office of the Ministry of Corporate |
||
12.3 |
31st March, 2016 |
Charged to the Statement of |
Affairs for approval of remuneration within |
|
|
Profit and Loss |
the overall limits approved by the members of |
||
22.5 |
31st March, 2017 |
Charged to the Statement of |
the Company for the years ended 31st March, |
|
|
Profit and Loss |
2015 and 31st March, 2016, and that for the |
||
Whole time |
26.7 |
31st March, 2015 |
Charged to the Statement of |
year ended 31st March, 2017, applications |
Director(s) |
|
Profit and Loss |
for revision in the remuneration, as approved |
|
17.3 |
31st March, 2016 |
Charged to the Statement of |
by the members of the Company, has been |
|
|
Profit and Loss |
made to the Ministry of Corporate Affairs. |
||
22.2 |
31st March, 2017 |
Charged to the Statement of |
The responses in respect of the foregoing re |
|
|
Profit and Loss |
representation / applications for revision are awaited from the Ministry of Corporate Affairs. Refer Note 59(11) to the standalone Ind AS financial statements. |
(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of paragraph 3 of the Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us, the Company is in compliance with Sections 177 and 188 of the Act, where applicable, for all transactions with the related parties identified by the Management of the Company, and the details of related party transactions have been disclosed in the standalone Ind AS financial statements as required by the applicable accounting standards.
(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause (xiv) of paragraph 3 of the Order is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to us, during the year, the Company has not entered into any non-cash transactions with its directors or directors of its subsidiary or associate company or persons connected with them and hence provisions of Section 192 of the Act are not applicable.
(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firmâs Registration No. 117366W/W-100018)
RAJESH K. HIRANANDANI
Place: Mumbai Partner
Date: 26th May, 2017 (Membership No. 36920)
Mar 31, 2015
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of SUN
PHARMACEUTICAL INDUSTRIES LIMITED (hereinafter referred to as "the
Company"), which comprise the Balance Sheet as at 31st March, 2015, the
Statement of Profit and Loss, the Cash Flow Statement for the year then
ended, and a summary of the significant accounting policies and other
explanatory information, in which are incorporated the financial
information of erstwhile Ranbaxy Laboratories Limited, now a division
of the Company (hereinafter referred to as "erstwhile Ranbaxy" or
"amalgamating company") for the year ended on that date, consequent to
its amalgamation into the Company which has been effected on 24th
March, 2015, with the appointed date of 1st April, 2014, audited by
other auditors (division / component auditors), referred in the 'Other
Matter' section below.
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 (hereinafter referred to
as "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 the 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
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 read together with our
remarks in paragraph 2 of the 'Emphasis of Matter' section below. Those
Standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the
standalone 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 controls 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 and the audit
evidence obtained by the other auditors (division / component auditors)
of the amalgamating company in terms of their report referred in the
'Other Matter' section below 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, and based on the consideration of the report
of the other auditors (division / component auditors) on the financial
information of the amalgamating company referred in the 'Other Matter'
section below, and read together with paragraphs 1 and 2 of the
'Emphasis of Matter' section below, 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 loss and its
cash flows for the year ended on that date.
Emphasis of Matter
1. We draw attention to Note 51 to the standalone financial
statements. As referred to in the said Note, the financial statements
of the Company for the year ended 31st March, 2015 were earlier
approved by the Board of Directors at their meeting held on 29th May,
2015 which were subject to revision by the Management of the Company so
as to give effect to the Scheme of Arrangement for amalgamation of Sun
Pharma Global Inc., a wholly owned subsidiary, into the Company w.e.f
1st January, 2015. Those financial statements were audited by us and
our report dated 29th May, 2015, addressed to the Members of the
Company, expressed an unqualified opinion on those financial statements
and included an Emphasis of Matter paragraph drawing attention to the
foregoing matter. Consequent to the Company obtaining the required
approvals, the aforesaid financial statements are revised by the
Company to give effect to the said Scheme of Arrangement.
2. Apart from the foregoing matter and the provision for proposed
dividend, the attached financial statements do not take into account
any events subsequent to the date on which the financial statements
referred to in paragraph 1 above were earlier approved by the Board of
Directors and reported upon by us as aforesaid.
3. a) We draw attention to Note 55 to the standalone financial
statements. As referred to in the said Note, remuneration to the
Managing Director and the Whole-time Directors for the previous year
ended 31st March, 2014 is in excess of the limits specified under
Schedule XIII to the Companies Act, 1956 by Rs. 44.7 Million and
commission of Rs. 6.4 Million for the previous year ended 31st March,
2014 to the Non-Executive Directors is in excess, since there is
absence of net profits for the previous year under section 309(4) read
with section 309(5) of the Companies Act, 1956. In this regard, the
Company has made necessary applications to the Central Government for
the waiver of the excess remuneration and commission for the previous
year ended 31st March, 2014. The Company is awaiting Central Government
approval in respect of the said applications.
b) We draw attention to Note 55 to the standalone financial statements.
As referred to in the said Note, remuneration to the Managing Director
and the Whole-time Director for the year is in excess of the limits
specified under Schedule V to the Companies Act, 2013 by Rs. 20.7
Million. In this regard, the Company has made necessary applications to
the Central Government for approving the amounts of maximum
remuneration payable, which includes the excess amounts already paid /
provided. The Company is awaiting Central Government approval in
respect of the said applications.
Our opinion is not modified in respect of these matters.
Other Matter
The standalone financial statements include the financial information
of erstwhile Ranbaxy consequent to its amalgamation into the Company
which has been effected on 24th March, 2015, with the appointed date of
1st April, 2014 (Refer Note 48 to the standalone financial statements).
We did not audit the financial information of erstwhile Ranbaxy,
included in the standalone financial statements of the Company, whose
financial information reflect total assets of Rs. 88,083.7 Million as
at 31st March, 2015, total revenue of Rs. 55,867.3 Million and net cash
outflow of Rs. 4,674.2 Million for the year ended on that date, as
considered in the standalone financial statements. This financial
information of erstwhile Ranbaxy has been audited by other auditors
(division / component auditors) whose report has been furnished to us
and our opinion, in so far as it relates to the amounts and disclosures
included in respect of erstwhile Ranbaxy and our report in terms of
sub-sections (3) and (11) of Section 143 of the Act, insofar as it
relates to erstwhile Ranbaxy is based solely on the report of such
other auditors (division / component auditors).
Our opinion on the standalone financial statements, and our report on
the Other Legal and Regulatory Requirements below, is not modified in
respect of the above matter with respect to our reliance on the work
done and the report of the other auditors (division / component
auditors).
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 in terms of Section 143(11)
of the Act, based on our comments and in terms of the comments in the
report of the other auditors (division / component auditors) in respect
of the amalgamating Company referred in the 'Other Matter' section
above, we give in the Annexure 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
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 and the financial information adequate for the purpose of
our audit have been received in respect of the amalgamating company
audited by the other auditors (division / component auditors) referred
in the 'Other Matter' section above.
(c) The report on the financial information of the amalgamating company
audited by the other auditors (division / component auditors) referred
in the 'Other Matter' section above has been sent to us and has been
properly dealt with by us in preparing this report.
(d) 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 and the financial information in respect of the
amalgamating company audited by the other auditors (division /
component auditors) referred in the 'Other Matter' section above.
(e) In our opinion, and based on the consideration of the report of the
other auditors (division / component auditors) on the financial
information of the amalgamating company referred in the 'Other Matter'
section above, 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.
(f) On the basis of the 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.
(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 and in terms of the report of
the other auditors (division / component auditors) in respect of the
amalgamating company referred in the 'Other Matter' section above:
i. The standalone financial statements disclose the impact of pending
litigations on the financial position of the company  Refer Notes
28(a) and 28(c) to the standalone financial statements;
ii. The Company has made provision, as required under the applicable
law or accounting standards, for material foreseeable losses, if any,
on long-term contracts including derivative contracts  Refer Note 6
and Note 10 to the standalone financial statements;
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Our reporting on the Order includes erstwhile Ranbaxy which has been
audited by other auditors (division / component auditors) referred in
the 'Other Matter' section of our report of even date and our report in
respect of the division (erstwhile Ranbaxy) is based solely on the
report of the other auditors (division / component auditors), to the
extent considered applicable for reporting under the Order in the case
of the standalone financial statements.
(i) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of the fixed assets.
(b) The Company has a program of verification of fixed assets to cover
all the items in a phased manner over a period of three years which, in
our opinion and the opinion of the other auditors (division / component
auditors), is reasonable having regard to the size of the Company and
the nature of its assets. Pursuant to the program, certain fixed assets
were physically verified by the Management during the year. According
to the information and explanations given to us and the other auditors
(division / component auditors), no material discrepancies were noticed
on such verification.
(ii) In respect of its inventories:
(a) As explained to us and the other auditors (division / component
auditors), the inventories, except for goods in transit, were
physically verified during the year by the Management at reasonable
intervals.
(b) In our opinion and the opinion of the other auditors (division /
component auditors) and according to the information and explanations
given to us and the other auditors (division / component auditors), the
procedures of physical verification of inventories followed by the
Management were reasonable and adequate in relation to the size of the
Company and the nature of its business.
(c) In our opinion and the opinion of the other auditors (division /
component auditors) and according to the information and explanations
given to us and the other auditors (division / component auditors), the
Company has maintained proper records of its inventories and no
material discrepancies were noticed on physical verification.
(iii) According to the information and explanations given to us and the
other auditors (division / component auditors), the Company has granted
loans, secured or unsecured, to companies, firms or other parties
covered in the Register maintained under Section 189 of the Companies
Act, 2013 (hereinafter referred to as "the Act"), where:
(a) In respect of loans granted to an associate:
(I) There is no receipt of the principal amount of Rs. 512.0 Million
and the interest thereon of Rs. 88.8 Million.
(II) There is no evidence of reasonable steps having been taken for the
recovery of the principal outstanding or interest receivable. As
represented to us by the Management of the Company, the Company is
evaluating various options to recover its dues in respect of the
principal amount and the interest thereon.
Refer Note 45 to the Financial Statements.
(b) In respect of the other loans:
(I) The receipts of the principal amounts have been regular / as per
stipulations. No interest was due during the year in respect of such
loans.
(II) There is no overdue amount remaining outstanding as at the
year-end.
(iv) In our opinion and the opinion of the other auditors (division /
component auditors) and according to the information and explanations
given to us and the other auditors (division / component auditors),
having regard to the explanations that some of the items purchased are
of a special nature and suitable alternative sources are not readily
available for obtaining comparable quotations and that some of the
items sold are of a special nature where there are no similar
transactions with other parties, there is an adequate internal control
system commensurate with the size of the Company and the nature of its
business with regard to purchases of inventory and fixed assets and the
sale of goods and services. During the course of our and the other
auditors (division / component auditors) audit, we and the other
auditors (division / component auditors) have not observed any
continuing failure to correct major weakness in such internal control
system.
(v) According to the information and explanations given to us and the
other auditors (division / component auditors), the Company has not
accepted any deposit from the public during the year in terms of the
provisions of Sections 73 and 76 or any other relevant provisions of
the Act.
(vi) We and the other auditors (division / component auditors) have
broadly reviewed the cost records maintained by the Company pursuant to
the Companies (Cost Records and Audit) Rules, 2014, as amended and the
Cost Accounting Records (Pharmaceutical Industry) Rules, 2011
prescribed by the Central Government under sub-section (1) of Section
148 of the Act, and are of the opinion that, prima facie, the
prescribed cost records have been made and maintained. We and the other
auditors (division / component auditors) have, however, not made a
detailed examination of the cost records with a view to determine
whether they are accurate or complete.
(vii) According to the information and explanations given to us and the
other auditors (division / component auditors), in respect of statutory
dues:
(a) The Company has generally been regular in depositing undisputed
statutory dues, including Provident Fund, Employees' State Insurance,
Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise
Duty, Value added Tax, Cess and other material statutory dues
applicable to it with the appropriate authorities, though there have
been slight delays in few cases.
(b) There were no undisputed amounts payable in respect of Provident
Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax,
Service Tax, Customs Duty, Excise Duty, Value added Tax, Cess and other
material statutory dues in arrears as at 31st March, 2015 for a period
of more than six months from the date they became payable.
(c) Details of dues of Income Tax, Sales Tax, Wealth Tax, Service Tax,
Customs Duty, Excise Duty and Value added Tax which have not been
deposited as at 31st March, 2015 on account of disputes, are given
below:
Statute Nature of Dues Forum where Dispute is Pending
Income Tax Act, Income Tax,
Interest Commissioner
1961 and Penalty
Income Tax Appellate Tribunal
(ITAT)
Sales Tax Act/ VAT Sales Tax,
Interest Assistant / Deputy /Joint
(Various States) and Penalty Commissioner
Tribunal
Appellate Authority
High Court
Entry Tax Madhya Pradesh Commercial Tax
Appellate Board
Wealth Tax Act, 1957 Wealth Tax Commissioner
Tribunal
The Central Excise Service Tax Customs, Excise and Service Tax
Act, 1944 Appellate Tribunal (CESTAT),
Delhi
Customs Act, 1962 Custom Duty,
Penalty High Court
and Interest
The Central Excise Excise Duty,
Interest Assistant / Deputy / Joint
Act, 1944 and Penalty Commissioner
Tribunal
High Court
Supreme Court
Sales Tax Act Value Added Tax Additional/Assistant/Deputy/
(Various States) Joint/ Senior Joint
Commissioner
Tribunal
High Court
Statute Period to which the Amount
Involved
Amount Relates (Rs. In Million)
Income Tax Act, 1961 1998-99, 2005-06, 2006-07 3,202.4
and 2008-09 to 2010-11
Sales Tax Act/VAT 1995-96, 2007-08 2,912.4
and 2009-10
1998-99 to 2000-01, 2003- 3.1
04, 2004-05 and 2008-09
1999-2000 to 2001-02 1.8
2008-09 1.4
1999-2000, 2001-02 to 2003- 24.0
04 and 2005-06 to 2010-11
2009-10 2.5
Wealth Tax Act, 1957 2010-11 0.1
2007-08 to 2009-10 0.3
The Central Excise
Act, 1944 2006 to 2011 4.4
Customs Act, 1962 2000-01 15.4
The Central Excise
Act, 1944 1995-96 to 1998-99 and 892.0
2000-01 to 2014-15
1999-00 to 2013-14 594.3
1989-90 to 1998-99 and 60.5
2002-03 to 2004-05
Sales Tax Act 1995-96 to 2003-04 21.5
2005-06 to 2008-09 and 17.7
2010-11 to 2012-13
2008-09 1.2
2009-10 and 2010-13 94.0
There were no dues of Cess which have not been deposited as on 31st
March, 2015 on account of disputes.
(d) The Company has been regular in transferring amounts to the
Investor Education and Protection Fund in accordance with the relevant
provisions of the Companies Act, 1956 (1 of 1956) and Rules made
thereunder within time.
(viii) The Company does not have accumulated losses of the Company at
the end of the financial year, however the Company has incurred cash
losses during the financial year covered by our audit and in the
immediately preceding financial year.
(ix) In our opinion and the opinion of the other auditors (division /
component auditors) and according to the information and explanations
given to us and the other auditors (division / component auditors), the
Company has not defaulted in the repayment of dues to financial
institutions, banks and debenture holders.
(x) In our opinion and the opinion of the other auditors (division /
component auditors) and according to the information and explanations
given to us and the other auditors (division / component auditors), the
terms and conditions of the guarantees given and letters of comfort
issued by the Company for loans taken by others from banks and
financial institutions are not prima facie prejudicial to the interests
of the Company.
(xi) In our opinion and the opinion of the other auditors (division /
component auditors) and according to the information and explanations
given to us and the other auditors (division / component auditors),
except for term loans lying unutilised as at 31st March, 2015, the term
loans have been applied by the Company during the year for the purposes
for which they were obtained.
(xii) To the best of our and the other auditors (division / component
auditors) knowledge and according to the information and explanations
given to us and the other auditors (division / component auditors), no
fraud by the Company and no material fraud on the Company has been
noticed or reported during the year.
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
RAJESH K. HIRANANDANI
Partner
(Membership No. 36920)
Place of Signature: Mumbai
Date: 29th May, 2015 [11th August, 2015 as to effect the matters
discussed under paragraphs 1 and 2 of the 'Emphasis of Matter'
section above]
Mar 31, 2014
We have audited the accompanying financial statements of SUN
PHARMACEUTICAL INDUSTRIES LIMITED("the Company"), which comprise the
Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss
and the Cash Flow Statement for the year then ended, and a summary of
the significant accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
The Company''s 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 notified under the Companies
Act, 1956 ("the Act") (which continue to be applicable in respect of
Section 133 of the Companies Act, 2013 in terms of General Circular
15/2013 dated 13th September, 2013 of the Ministry of Corporate
Affairs) and in accordance with the accounting principles generally
accepted in India. 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.
Auditors'' 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 read together with our remarks in paragraph (c)
under the ''Emphasis of Matter'' section below. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whetherthe financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts 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 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, but not for the purpose of expressing an opinion on the
effectiveness of the Company''s internal control. An audit also includes
evaluating the appropriateness of the accounting policies used and the
reasonableness of the accounting estimates made by the 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 aforesaid financial statements, read
together with the''Emphasis of Matter''section below, 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 ofthe
Company as at 31st March, 2014;
(b) in the case ofthe Statement of Profit and Loss, ofthe loss of the
Company for the year ended on that date; and
(c) in the case ofthe Cash Flow Statement, ofthe cash flows ofthe
Company for the year ended on that date.
Emphasis of Matter
(a) We draw attention to Note 48 to the financial statements. As
referred to in the said Note,the financial statements of the Company
for the year ended 31st March, 2014 were earlier approved by the Board
of Directors at their meeting held on 29th May, 2014 which were subject
to revision by the Management of the Company so as to give effect to
the Scheme of Arrangement for demerger ofthe specified undertakings of
Sun Pharma Global FZE, a wholly owned subsidiary, into the Company
w.e.f 1st May, 2013. Those financial statements were audited by us and
our report dated 29th May, 2014, addressed to the Members ofthe
Company, expressed an unqualified opinion on those financial statements
with an Emphasis of Matter paragraph drawing attention to the foregoing
matter. Consequent to the Company obtaining the required approvals, the
aforesaid financial statements are revised by the Company to give
effect to the said Scheme of Arrangement.
(b) We draw attention to Note 50 to the financial statements. As
referred to in the said Note, consequent to giving effect to the Scheme
of Arrangement(i) remuneration to the Managing Director and the
Whole-time Directors for the year ended 31st March, 2014 is in excess
of the limits specified under Schedule XIII to the Act, byRs. 44.7
Million; and (ii) commission of Rs. 6.4 Million for the year ended 31st
March, 2014 to the Non-Executive Directors is in excess, since there is
absence of net profits for the year under section 309(4) read with
section 309(5) of the Act. In this regard, we have been informed by the
Management of the Company that they are in the process of seeking
approval from the shareholders of the Company and the Central
Government in respect of the aforesaid amounts.
(c) Apart from the foregoing matters and the provision for proposed
dividend, the attached financial statements do not take into account
any events subsequent to the date on which the financial statements
referred to in (a) above were earlier approved by the Board of
Directors and reported upon by us as aforesaid.
Our opinion is not qualified in respect of these matters.
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 in terms of Section 227(4A) of
the Act, we give in theAnnexurea 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 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, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account.
(d) In our opinion, the Balance Sheet, the Statement of Profit and
Loss, and the Cash Flow Statement comply with the Accounting Standards
notified under the Act (which continue to be applicable in respect of
Section 133 of the Companies Act, 2013 in terms of General Circular
15/2013 dated 13th September, 2013 of the Ministry of Corporate
Affairs).
(e) On the basis of the written representations received from the
directors as on 31st March, 2014 taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March, 2014
from being appointed as a director in terms of Section 274(1) (g) of
the Act.
ANNEXURETOTHE INDEPENDENT AUDITORS'' REPORT (Referred to in paragraph 1
under ''Report on Other Legal and Regulatory Requirements'' section of
our report of even date)
(i) Having regard to the nature of the Company''s business / activities
/ results during the year, clauses vi, x, xiii, xiv, xviii, xix and xx
of paragraph 4 of the Order are not applicable to the Company.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of the fixed assets.
(b) The fixed assets were physically verified during the year by the
Management in accordance with a regular programme of verification
which, in our opinion, provides for physical verification of all the
fixed assets at reasonable intervals. According to the information and
explanations given to us, no material discrepancies were noticed on
such verification.
(c) The fixed assets disposed off during the year, in our opinion, do
not constitute a substantial part of the fixed assets of the Company
and such disposal has, in our opinion, not affected the going concern
status of the Company.
(iii) In respect of its inventory:
(a) As explained to us, the inventories were physically verified during
the year by the Management at reasonable intervals.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the Management were reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories and no material discrepancies were noticed on physical
verification.
(iv) In respect of loans, secured or unsecured, granted by the Company
to companies, firms or other parties covered in the Register maintained
under Section 301 of the Companies Act 1956, according to the
information and explanations given to us:
(a) The Company has granted loans aggregating Rs. 311.0 Million to one
party during the year. At the year-end, the outstanding balances of
such loans granted was Rs. Nil and the maximum amount involved during the
year was Rs. 878.4 Million (number of parties - one).
(b) The rate of interest and other terms and conditions of such loans
are, in our opinion, prima facie not prejudicial to the interest of the
Company.
(c) The receipts of principal amounts and interest have been regular as
per stipulations.
(d) There are no overdue principal amounts and interest remaining
outstanding as at the year-end.
The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties listed in the Register maintained
under Section 301 of the Companies Act, 1956.
(v) In our opinion and according to the information and explanations
given to us, having regard to the explanations that some of the items
purchased are of a special nature and suitable alternative sources are
not readily available for obtaining comparable quotations, there is an
adequate internal control system commensurate with the size of the
Company and the nature of its business with regard to purchases of
inventory and fixed assets and the sale of goods and services. During
the course of our audit, we have not observed any major weakness in
such internal control system.
(vi) In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
(a) The particulars of contracts or arrangements referred to in Section
301 that needed to be entered into the Register maintained under the
said Section have been so entered.
(b) Where each of such transaction (excluding loans reported under
paragraph (iv) above) is in excess of Rs. 5 lakhs in respect of any
party, having regard to our comments in paragraph (v) above, the
transactions have been made at prices which are prima facie reasonable
having regard to the prevailing market prices at the relevant time,
other than certain purchases which are of a special nature for which
comparable quotations are not available and in respect of which we are,
therefore, unable to comment if the transactions have been carried out
at prices having regard to the prevailing market prices at the relevant
time.
(vii) In our opinion, the internal audit functions carried out during
the year by firms of Chartered Accountants appointed by the Management
have been commensurate with the size of the Company and the nature of
its business.
(viii) We have broadly reviewed the cost records maintained by the
Company pursuant to the Companies (Cost Accounting Records) Rules, 2011
and the Cost Accounting Records (Pharmaceutical Industry) Rules, 2011
prescribed by the Central Government under Section 209(1)(d) of the
Companies Act, 1956 and are of the opinion that prima facie the
prescribed cost records have been made and maintained. We have,
however, not made a detailed examination of the cost records with a
view to determine whether they are accurate or complete.
(ix) According to the information and explanations given to us, in
respect of statutory dues:
(a) The Company has generally been regular in depositing 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 and other material
statutory dues applicable to it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident
Fund, Investor Education and Protection Fund, Employees'' State
Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs
Duty, Excise Duty and other material statutory dues in arrears as at
31st March, 2014 for a period of more than six months from the date
they became payable.
(c) Details of dues of Income Tax, Sales Tax, Wealth Tax, Customs Duty
and Excise Duty which have not been deposited as at 31st March, 2014 on
account of disputes, are given below:
Statute Nature of Dues Forum where dispute is
pending
Income Tax Act, Income Tax, Interest Commissioner
1961 and Penalty
Tribunal
Sales TaxAct Sales Tax, Interest and Assistant/Deputy /
(Various States) Penalty Joint Commissioner
Tribunal
Appellate Authority
High Court
Wealth TaxAct, Wealth Tax Commissioner
1957
Tribunal
Customs Act,
1962 Custom Duty, Penalty High Court
and Interest
The Central
Excise Excise Duty, Interest Assistant / Deputy /
Act, 1944 and Penalty Joint Commissioner
Tribunal
High Court
Supreme Court
Statue Period to which the
amount relates Amount involved
(Rs.In Million)
Income Tax Act,
1961 1998-99, 2004-05,
2007-08, 2008- 2,692.6
09 and 2009-10
1997-98 0.2
Sales Tax Act
(Various States) 1998-99 to 2000-01, 2003-04, 7.5
2004-05, 2007-08, 2008-09 and
2010-11
1998-99 to 2004-05 3.7
2006-07 to 2009-10 2.2
1999-00, 2001-02 to 2003-04, 22.0
2005-06 to 2010-11
Wealth Tax Act,
1957 2010-11 0.1
2002-03 and 2003-04, 2007-08 to 0.4
2009-10
Customs Act, 1962 2000-01 14.6
The Central Excise
Act, 1944 1998-99 to 2013-14 865.1
2001-02 to 2012-13 494.0
1989-90 to 1998-99, 2002-03 to 27.5
2004-05
1995-96 to 2003-04 18.6
There were no unpaid disputed dues in respect of service tax during the
year.
(x) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in the repayment of dues to
banks. The Company does not have any dues to financial institutions and
has not issued any debentures.
(xi) In our opinion, the Company has maintained adequate records where
it has granted loans and advances on the basis of security byway of
pledge of shares. The Company has not granted any loans and advances on
the basis of security by way of pledge of debentures and other
securities.
(xii) In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantees given by the
Company for loans taken by others from banks and financial
institutions, are not prima facie prejudicial to the interests of the
Company.
(xiii) In our opinion and according to the information and explanations
given to us, the term loans have been applied by the Company during the
year for the purposes for which they were obtained.
(xiv) In our opinion and according to the information and explanations
given to us and on an overall examination of the Balance Sheet of the
Company, we report that the funds raised on short-term basis have,
prima facie, not been used during the year for long-term investment.
(xv) To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no material fraud
on the Company has been noticed or reported during the year.
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm''s Registration No. 117366W/W-100018)
Rajesh K. Hiranandani
Partner
(Membership No. 36920)
MUMBAI, 29th May, 2014[12th August, 2014 as to effect the matters
discussed under the ''Emphasis of Matter'' section above]
Mar 31, 2012
1. We have audited the attached Balance Sheet of SUN PHARMACEUTICAL
INDUSTRIES LIMITED ("the Company") as at 31st March, 2012, the
Statement of Profit and Loss and the Cash Flow Statement of the Company
for the year ended on that date, both 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 the auditing standards
generally accepted in India read together with our remarks in paragraph
3(b) below. 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 the disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and the significant estimates made by the Management,
as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
3. (a) The financial statements of the Company for the year ended 31st
March, 2012 were earlier approved by the Board of Directors at their
meeting held on 29th May, 2012 which were audited by us and our report
dated 29th May, 2012, addressed to the Members of the Company,
expressed an unqualified opinion on those financial statements.
Subsequently, the Board of Directors approved the Scheme of Arrangement
in the nature of spin off, of Domestic Formulation Undertaking of the
Company into Sun Pharma Laboratories Limited, a wholly owned subsidiary
of the Company, effective from the close of business hours on 31st
March, 2012, the appointed date, as stated in Note 45 to the financial
statements. The aforesaid financial statements were not laid for
adoption at the annual general meeting held on 8th November, 2012 and
it was resolved to approve such financial statements only after the
same are revised for giving effect to the aforesaid Scheme of
Arrangement. Consequent to the Orders dated 3rd May, 2013 of the
Hon''ble High Court of Gujarat and the Hon''ble High Court of Bombay
sanctioning the said Scheme of Arrangement, the aforesaid financial
statements are revised by the Company to give effect to the said spin
off, effective from 31st March, 2012.
(b) Apart from the foregoing event, the attached financial statements
do not take into account any events subsequent to the date on which the
financial statements were earlier approved by the Board of Directors
and reported upon by us as aforesaid.
4. As required by the Companies (Auditor''s Report) Order, 2003 (CARO)
issued by the Central Government of India in terms of Section 227 (4A)
of the Companies Act, 1956, we give in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.
5. Further to our comments in the Annexure referred to in paragraph 4
above and read with our comments in paragraph 3 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 purposes of our
audit;
(ii) 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;
(iii) 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;
(iv) in our opinion, the Balance Sheet, the Statement of Profit and
Loss and the Cash Flow Statement dealt with by this report are in
compliance with the Accounting Standards referred to in Section 211(3C)
of the Companies Act, 1956;
(v) in our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, 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 31st March, 2012;
(b) in the case of the Statement of Profit and Loss, of the profit of
the Company for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
6. On the basis of written representations received from the Directors
as on 31st March, 2012 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 a director in terms of Section 274(1)(g)
of the Companies Act, 1956.
ANNEXURE TO THE AUDITORS'' REPORT
(Referred to in paragraph 4 of our report of even date)
(i) Having regard to the nature of the Company''s
business/activities/results, clauses vi, x, xiii, xiv, xvi, xviii, xix
and xx of CARO are not applicable.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) The fixed assets were physically verified during the year by the
Management in accordance with a regular programme of verification
which, in our opinion, provides for physical verification of all the
fixed assets at reasonable intervals. According to the information and
explanations given to us, no material discrepancies were noticed in
respect of fixed assets verified during the year.
(c) The fixed assets disposed off during the year, in our opinion, do
not constitute a substantial part of the fixed assets of the Company
and such disposal has, in our opinion, not affected the going concern
status of the Company.
(iii) In respect of its inventory:
(a) As explained to us, the inventories (excluding inventories lying
with third parties) were physically verified during the year by the
Management at reasonable intervals. In respect of inventories lying
with third parties, these have substantially been confirmed by them.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the Management were reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories and no material discrepancies were noticed on physical
verification.
(iv) The Company has neither granted nor taken any loans, secured or
unsecured, to/from companies, firms or other parties listed in the
Register maintained under Section 301 of the Companies Act, 1956.
(v) In our opinion and according to the information and explanations
given to us, having regard to the explanations that some of the items
purchased are of special nature and suitable alternative sources are
not readily available for obtaining comparable quotations, there is an
adequate internal control system commensurate with the size of the
Company and the nature of its business with regard to purchases of
inventory and fixed assets and the sale of goods and services. During
the course of our audit, we have not observed any major weakness in
such internal control system.
(vi) In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
(a) The particulars of contracts or arrangements referred to in Section
301 that needed to be entered into the Register maintained under the
said Section have been so entered.
(b) Where each of such transaction is in excess of Rs. 5 lakhs in
respect of any party, the transactions have been made at prices which
are prima facie reasonable having regard to the prevailing market
prices at the relevant time, except in respect of certain purchases for
which comparable quotations are not available and in respect of which
we are unable to comment.
(vii) In our opinion, the internal audit functions carried out during
the year by firms of Chartered Accountants appointed by the Management
have been commensurate with the size of the Company and the nature of
its business.
(viii) We have broadly reviewed the cost records maintained by the
Company pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under Section 209(1)(d) of the
Companies Act, 1956 and are of the opinion that prima facie the
prescribed cost records have been maintained. We have, however, not
made a detailed examination of the cost records with a view to
determine whether they are accurate or complete.
(ix) According to the information and explanations given to us in
respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed
dues, including Provident Fund, Investor Education and Protection Fund,
Employees'' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service
Tax, Customs Duty, Excise Duty and other material statutory dues
applicable to it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Income-tax,
Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and other
material statutory dues in arrears as at 31st March, 2012 for a period
of more than six months from the date they became payable.
(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Customs Duty
and Excise Duty which have not been deposited as at 31st March, 2012 on
account ofdisputes, are given below:
Statute Nature of Dues Forum where
dispute is pending
The Central Excise Act, Excise Duty, Interest Assistant / Deputy /
1944 and Penalty Joint Commissioner
Tribunal
High Court
Customs Act, 1962 Customs Duty, Penalty Settlement Commission
and Interest
Sales Tax Act
(Various States) Sales Tax, Interest Assistant / Deputy /
and Penalty Joint Commissioner
Tribunal
High Court
Income-tax Act, 1961 Income tax, Interest Commissioner
and Penalty
Tribunal
High Court
Wealth Tax Act, 1957 Wealth tax Commissioner
Tribunal
Statute Period to which the amount relates Amount
involved
(Rs. in
Million)
The Central Excise
Act, 1944 2002-03 to 2009-10 30.8
1997-98, to 2000-01 and 2002-03 to 261.5
2008-09
1998-99, 2001-02, 2006-07 and 2007-08 1.4
Customs Act, 1962 2000-01 12.0
Sales Tax Act 1998-99, 1999-00, 2002-03 and 2004-05 2.7
1998-99 to 2004-05 2.9
2003-04 13.9
Income-tax Act 1961 2003-04, 2006-07 and 2008-09 1,085.8
1996-97 and 2003-2004 0.9
1997-98 2.0
Wealth Tax Act 1957 2001-02, 2002-03, 2006-07, 2008-09 0.4
and 2009-10
2003-04 and 2004-05 0.1
There were no unpaid disputed dues in respect of service tax during the
year.
(x) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in the repayment of dues to
banks. The Company does not have any dues to financial institutions and
has not issued any debentures.
(xi) In our opinion, the Company has maintained adequate records where
it has granted loans and advances on the basis of security by way of
pledge of shares. The Company has not granted any loans and advances on
the basis of security by way of pledge of debentures and other
securities.
(xii) In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantees given by the
Company for loans taken by others from banks and financial
institutions, are not prima facie prejudicial to the interests of the
Company.
(xiii) In our opinion and according to the information and explanations
given to us and on an overall examination of the Balance Sheet of the
Company, we report that the funds raised on short-term basis have,
prima facie, not been used during the year for long-term investment.
(xiv) To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no material fraud
on the Company has been noticed or reported during the year.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firm Registration No.117366W)
Rajesh K Hiranandani
Partner
(Membership No. 36920)
Mar 31, 2011
1. We have audited the attached Balance Sheet of SUN PHARMACEUTICAL
INDUSTRIES LIMITED (Ãthe CompanyÃ) as at 31st March, 2011, the Profit
and Loss Account and the Cash Flow Statement of the Company for the
year ended on that date, both 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 the 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 the disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates
made by the 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 (Auditor's Report) Order, 2003 (CARO)
issued by the Central Government of India in terms of Section 227 (4A)
of the Companies Act, 1956, we give 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 in paragraph 3
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 purposes of our
audit;
(ii) 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;
(iii) the Balance Sheet, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
(iv) in our opinion, the Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement dealt with by this report are in compliance
with the Accounting Standards referred to in Section 211(3C) of the
Companies Act, 1956;
(v) in our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, 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 31st March, 2011;
(b) in the case of the Profit and Loss Account, of the profit of the
Company for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
5. On the basis of written representations received from the Directors
as on 31st March, 2011 and taken on record by the Board of Directors,
we report that none of the Directors is disqualified as on 31st March,
2011 from being appointed as a director in terms of Section 274(1)(g)
of the Companies Act, 1956.
ANNEXURE TO THE AUDITORS' REPORT
(Referred to in paragraph 3 of our report of even date)
(i) Having regard to the nature of the Company's
business/activities/result clauses vi, xiii, xiv, xvi, xviii, xix and
xx of CARO are not applicable.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) The fixed assets were physically verified during the year by the
Management in accordance with a regular programme of verification
which, in our opinion, provides for physical verification of all the
fixed assets at reasonable intervals. According to the information and
explanation given to us, no material discrepancies were noticed on such
verification.
(c) The fixed assets disposed off during the year, in our opinion, do
not constitute a substantial part of the fixed assets of the Company
and such disposal has, in our opinion, not affected the going concern
status of the Company.
(iii) In respect of its inventory:
(a) As explained to us, the inventories (excluding inventories lying
with third parties) were physically verified during the year by the
Management at reasonable intervals. In respect of inventories lying
with third parties, these have substantially been confirmed by them.
(b) In our opinion and according to the information and explanation
given to us, the procedures of physical verification of inventories
followed by the Management were reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories and no material discrepancies were noticed on physical
verification.
(iv) The Company has neither granted nor taken any loans, secured or
unsecured, to/from companies, firms or other parties listed in the
Register maintained under Section 301 of the Companies Act, 1956.
(v) In our opinion and according to the information and explanations
given to us, having regard to the explanations that some of the items
purchased are of special nature and suitable alternative sources are
not readily available for obtaining comparable quotations, there is an
adequate internal control system commensurate with the size of the
Company and the nature of its business with regard to purchases of
inventory and fixed assets and the sale of goods and services. During
the course of our audit, we have not observed any major weakness in
such internal control system.
(vi) In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
(a) The particulars of contracts or arrangements referred to in Section
301 that needed to be entered into the Register maintained under the
said Section have been so entered.
(b) Where each of such transaction is in excess of Rs. 5 lakhs in respect
of any party, the transactions have been made at prices which are prima
facie reasonable having regard to the prevailing market prices at the
relevant time, except in respect of certain purchases for which
comparable quotations are not available and in respect of which we are
unable to comment.
(vii) In our opinion, the internal audit functions carried out during
the year by firms of Chartered Accountants appointed by the Management
have been commensurate with the size of the Company and the nature of
its business.
(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government for the
maintenance of cost records under Section 209(1)(d) of the Companies
Act, 1956 in respect of manufacture of formulation and bulk drug
products and are of the opinion that prima facie the prescribed
accounts and records have been made and maintained. We have, however,
not made a detailed examination of the records with a view to
determining whether they are accurate or complete. To the best of our
knowledge and according to the information and explanations given to
us, the Central Government has not prescribed the maintenance of cost
records for any other products of the Company.
(ix) According to the information and explanations given to us in
respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed
dues, including Provident Fund, Investor Education and Protection Fund,
Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service
Tax, Custom Duty, Excise Duty, Cess and other material statutory dues
applicable to it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Income-tax,
Sales Tax, Service Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and
other material statutory dues in arrears as at 31st March, 2011 for a
period of more than six months from the date they became payable.
(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Custom Duty
and Excise Duty, which have not been deposited as at 31st March, 2011
on account of disputes, are given below:
Statute Nature of Dues Forum where Period to which the Amount
involved
dispute is
pending amount relates (Rs. In
Million)
The Central Excise Duty, Assistant /
Deputy / 2002-03, 2004-05,
2005-06, 31.6
Excise Act, Interest and
Penalty Joint
Commissioner 2006-07, 2007-08,
2008-09,
1944 2009-10
Tribunal 1997-98, 1998-99,
1999-00, 259.5
2000-01, 2002-03,
2003-04, 2004-05,
2005-06, 2006-07,
2007-08, 2008-09
High Court 1998-99, 2001-02,
2006-07, 1.6
2007-08
Customs Act, Custom Duty, Settlement
Commission 2000-01 11.5
1962 Penalty and
Interest
Sales Tax
Act Sales Tax,
Interest and Assistant /
Deputy /
Joint 1994-95, 1998-99,
1999-00, 4.7
(Various
States) Penalty Commissioner 2000-01, 2002-03
Tribunal 1998-99, 2001-02,
2002-03, 2.9
2003-04, 2004-05
High Court 1981-82 to 1985-86,
2003-04 14.5
Income Tax Income tax and Tribunal 1996-97, 2002-03 0.9
Act, 1961 Interest
Commissioner 1997-98 8.4
Wealth Tax Wealth tax Commissioner 2003-04, 2004-05,
2008-09 0.2
Act, 1957
Employee
State Contribution
and Appellate
authority 1987 to 1992 0.2
Insurance Interest
Act, 1948
Drugs Drug Price
Equilisation Drug Prices
Liability
Review 1981-1987 14.0
(Price
Control) Account
liability and Committee
Order, 1979 interest
There were no unpaid disputed dues in respect of service tax and cess
during the year.
(x) The Company does not have any accumulated losses as at the end of
the year. The Company has not incurred cash losses in the financial
year and in the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in the repayment of dues to
banks. The Company does not have any dues to financial institutions and
has not issued any debentures.
(xii) In our opinion, the Company has maintained adequate records where
it has granted loans and advances on the basis of security by way of
pledge of shares. The Company has not granted any loans and advances on
the basis of security by way of pledge of debentures and other
securities.
(xiii) In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantees given by the
Company for loans taken by others from banks and financial
institutions, are not prima facie prejudicial to the interests of the
Company.
(xiv) In our opinion and according to the information and explanations
given to us and on an overall examination of the Balance Sheet of the
Company, we report that the funds raised on short-term basis have,
prima facie, not been used during the year for long-term investment.
(xv) To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no material fraud
on the Company has been noticed or reported during the year.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Registration No. 117366W)
Rajesh K Hiranandani
Partner
MUMBAI, 28th May, 2011 (Membership No. 36920)
Mar 31, 2010
1. We have audited the attached Balance Sheet of Sun Pharmaceutical
Industries Limited ("the Company") as at March 31, 2010, the Profit and
Loss Account and the Cash Flow Statement for the year ended on that
date annexed thereto. These financial statements are the responsibility
of the Companys 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
("CARO") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Companies Act, 1956, 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 in Para 3
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 purposes 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
those 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 sub-section (3C) of Section 211 of
the Companies Act, 1956;
(v) in our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with
notes thereon, give the information required by the Companies Act,
1956, 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, 2010
(b) in the case of the Profit and Loss Account, of the profit of the
Company for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
5. On the basis of written representations received from the Directors
as on March 31, 2010 taken on record by the Board of Directors, none of
the Directors is disqualified as on March 31, 2010 from being appointed
as a director in terms of Section 274 (1) (g) of the Companies Act,
1956.
Annexure to the Auditors Report (Referred to in paragraph 3 of our
report of even date) Sun Pharmaceutical Industries Limited
(i) Having regards to the nature of the Companys
business/activities/result Clauses xiii, xiv, xviii, xix and xx of
paragraph 4 of the CARO, are not applicable.
(ii) In respect of its fixed assets: a) The Company has maintained
proper records showing full particulars, including quantitative details
and situation of fixed assets.
b) The fixed assets were physically verified during the year by the
management in accordance with a regular programme of verification
which, in our opinion, provides for physical verification of all the
fixed assets at reasonable interval. According to the information and
explanations given to us, no material discrepancies were noticed on
such verification.
c) The fixed assets disposed off during the year, in our opinion, do
not constitute a substantial part of the fixed assets of the Company
and such disposal has, in our opinion, not affected the going concern
status of the Company.
(iii) In respect of its inventories:
a) As explained to us, the inventories (excluding inventories lying
with third parties) were physically verified during the year by the
management at reasonable intervals. In respect of inventories lying
with third parties, these have substantially been confirmed by them.
b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the Management were reasonable and adequate in relation to
the size of the Company and the nature of its business.
c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories and no material discrepancies were noticed on physical
verification.
(iv) The Company has neither granted nor taken any loans, secured or
unsecured, to or from Companies, firms or other parties listed in the
Register maintained under Section 301 of the Companies Act, 1956.
(v) In our opinion and according to the information and explanations
given to us, having regard to the explanations that some of the items
purchased are of special nature and suitable alternative sources are
not readily available for obtaining comparable quotations, there is an
adequate internal control system commensurate with the size of the
Company and nature of its business with regard to purchase of inventory
and fixed assets and for sale of goods and services. During the course
of audit, we have not observed any major weaknesses in such internal
control system.
(vi) In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
a) The particulars of contracts or arrangements referred to in Section
301 that needed to be entered into the Register, maintained under the
said Section have been so entered.
b) Where each such transaction (excluding loans reported under
paragraph iv above) is in excess of Rs. 5 lakhs in respect of any
party, the transactions have been made at prices which are prima facie
reasonable having regard to prevailing market prices at the relevant
time, except in respect of certain purchases for which comparable
quotations are not available and in respect of which we are unable to
comment.
(vii) According to the information and explanations given to us, the
Company has not accepted any deposits within the meaning of Section 58A
and 58AA or any other relevant provisions of the Companies Act, 1956
and the Companies (Acceptance of Deposits) Rules, 1975 with regard to
deposits accepted from the public.
(viii) In our opinion, the internal audit functions carried out during
the year by firms of Chartered Accountants appointed by the Management
have been commensurate with the size of the Company and the nature of
its business.
(ix) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government for
maintenance of cost records under section 209 (1)(d) of the Companies
Act, 1956 in respect of manufacture of formulation and bulk drug
products and are of the opinion that prima facie the prescribed
accounts and records have been made and maintained. We have, however,
not made a detailed examination of the records with a view to
determining whether they are accurate or complete. To the best of our
knowledge and according to the information and explanations given to
us, the Central Government has not prescribed the maintenance of cost
records for any other product of the Company.
(x) According to the information and explanations given to us in
respect of statutory dues:
a) The Company has generally been regular in depositing undisputed
dues, including Provident Fund, Investor Education and Protection Fund,
Employees State Insurance, Income tax, Sales tax, Wealth Tax, Service
Tax, Custom Duty, Excise Duty, Cess and other material statutory dues
applicable to it with the appropriate authorities.
b) There were no undisputed amounts payable in respect of Income Tax,
Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory
dues in arrears as at March 31, 2010 for a period of more than six
months from the date they became payable.
c) Details of dues of Income Tax, Sales Tax, Wealth Tax, Custom Duty
and Excise Duty, which have not been deposited as at March 31, 2010 on
account of any disputes, are given below:
Statute Nature of Dues Forum where
dispute is pending
The Central Excise Duty, Assistant / Deputy /
Excise Act, Interest and Penalty Joint Commissioner
1944
Tribunal
High Court
Customs Act, Custom Duty, Settlement Commission
1962 Penalty and Interest
Sales Tax Act Sales Tax, Interest Assistant / Deputy/Joint
(Various States) and Penalty Commissioner
Tribunal
High Court
Income Tax Income tax and Tribunal
Act, 1961 Interest
Commissioner
Wealth Tax Wealth tax Commissioner
Act, 1957
Employee Contribution and Appellate authority
State Interest
Insurance
Act, 1948
Drugs Drug Price Equilisation Drug Prices Liability Review
(Price Control) Account liability and Committee
Order, 1979 interest
Statue Period to which the Amount involved
amount relates (Rs. In Million)
The Central
Excise Act,
1944 2002-03, 2004-05, 22.1
2005-06, 2006-07,
2007-08, 2008-09
1997-98, 1998-99, 264.6
1999-00, 2000-01,
2002-03, 2003-04,
2004-05, 2005-06,
2006-07, 2007-08,
2008-09
1998-99, 2001-02, 1.6
2006-07
Customs Act,
1962 2000-01 11.1
Sales Tax Act
(Various States) 1994-95, 1998-99, 6.0
1999-00, 2000-01,
2002-03, 2003-04
1998-99, 2001-02, 4.2
2002-03, 2003-04,
2004-05
1981-82 to 1985-86 0.7
Income Tax
Act, 1961 1995-96, 2002-03 0.9
2002-03, 2003-04, 225.2
2006-07
Wealth Tax
Act, 1957 2003-04, 2004-05, 0.4
2007-08
Employee
State
Insurance
Act, 1948 1987 to 1992 0.2
Drugs
(Price Control)
Order, 1979 1981-1987 14.0
There were no unpaid disputed dues in respect of service tax and cess
during the year.
(xi) The Company does not have any accumulated losses as at the end of
the year. The Company has not incurred cash losses in the financial
year and in the immediately preceding financial year.
(xii) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to
banks and financial institutions. The Company has not obtained any
borrowings by way of debentures.
(xiii) In our opinion, the Company has maintained adequate records
where it has granted loans and advances on the basis of security by way
of pledge of shares. The Company has not granted any loans and advances
on the basis of security by way of pledge of debentures and other
securities.
(xiv) In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantees given by the
Company for loan taken by others from banks and financial institutions,
are not prima facie prejudicial to the interest of the Company.
(xv) The Company has not obtained any term loans during the year.
(xvi) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that the funds raised on short term basis have, prima facie, not been
used during the year for long term investment.
(xvii) To the best of our knowledge and according to the information
and explanations given to us, no fraud by the Company and no material
fraud on the Company has been noticed or reported during the year.
For Deloitte Haskins & Sells
Chartered Accountants
(Registration No. 117366W)
K. A. Katki
Partner
(Membership No. 038568)
Place: Mumbai
Date: May 24, 2010