Mar 31, 2023
To the Members of Cipla Limited
Report on the Audit of the Standalone Financial StatementsOpinion
1. We have audited the accompanying standalone financial statements of Cipla Limited (''the Company''), which comprise the Balance Sheet as at 31st March, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of the significant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (''the Act'') in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (''Ind AS'')
specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2023, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (''ICAI'') 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 opinion.
Key Audit Matters 4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. |
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Key audit matters |
How our audit addressed the key audit matters |
|
DPCO matters: |
Our |
audit of DPCO matters included, but was not limited to, the |
The Company is regulated by National Pharmaceutical Pricing |
following procedures: |
|
Authority, Government of India (NPPA). There are a number of legal and regulatory cases, of which the most significant Drugs (Prices Control) Orders (DPCO) as disclosed in Note 38B (ii) to the standalone financial statements, relating to overcharging of certain drugs under DPCO. |
a) |
Obtained an understanding of the management''s process for updating the status of the matters, assessment of accounting treatment in accordance with Ind AS 37, and for measurement of amounts involved; |
According to NPPA''s public disclosure, the total demand against the Company aggregates to H 3,703.40 crores as at 31st March, 2023, of which: |
b) |
Evaluated the design and tested the operating effectiveness of key controls around above process; |
a) H 3,456.39 crores relates to matters pending at Honourable Bombay High Court, wherein the Holding Company has deposited H 175.08 crores being 50% of the total demand of H 350.15 crores as at 1st August, 2003 under protest pursuant to direction of Honourable Supreme Court of India; and |
c) |
Inspected correspondence with the Company''s external legal counsel in order to corroborate our understanding of these matters, accompanied by discussions with both internal and external legal counsels. Tested the objectivity and competence of such management experts involved; |
b) H 247.01 crores relates to other matters, wherein based on facts and legal advice, the Company has recorded a charge of H 6.89 crores (including interest) during the year ended 31st March, 2023 and carries a total provision of H 125.38 crores (including interest) as at 31st March, 2023. The amounts involved are material and the application of accounting principles as given under Ind AS 37, Provisions, Contingent Liabilities and |
d) |
Obtained direct confirmation from the external legal counsel handling DPCO matters with respect to the legal determination of the liability arising from such matters, conclusion of the matters in accordance with the requirements of Ind AS 37 and disclosures to be made in the financial statements. Evaluated the response received from the external legal counsel to ensure that the conclusions reached are supported by sufficient legal rationale; |
Contingent Assets (''Ind AS 37''), in order to determine the amounts to be recognised as liability or to be disclosed as a contingent liability or not, is inherently subjective and needs careful evaluation and significant judgement to be applied by the management. |
e) |
Assessed the appropriateness of methods used, and the reliability of underlying data for the calculations made for quantifying the amounts involved. Tested the arithmetical accuracy of such calculations; and |
Key audit matters |
How our audit addressed the key audit matters |
Considering the materiality and the inherent subjectivity which involves |
f) Evaluated the Company''s disclosures for adequate disclosure |
significant management judgment in predicting the outcome of the |
regarding the significant litigations of the Company. |
matter, DPCO matters have been considered to be a key audit matter for |
Based on the audit procedures performed, the judgements made by |
the current period audit. |
the management were reasonable and disclosures made in respect of these matters were appropriate in the context of the standalone financial statements taken as a whole. |
Recoverability of investments in subsidiaries: |
Our audit included, but was not limited to, the following procedures: |
The Company has investments of H 9,029.34 crores in subsidiaries |
a) Obtained an understanding of the management''s process for |
being carried at cost in accordance with Ind AS 27, Separate Financial |
identification of impairment indicators and tested the design |
Statements. The Company assesses the recoverable amounts of each |
and operating effectiveness of internal controls over such |
investment when impairment indicators exist by comparing the fair |
identification and impairment measurement through fair |
value (less costs of disposal) and carrying amount of that investment as |
valuation of identified investments; |
on the reporting date. |
b) Involved auditor''s experts to assess the appropriateness of the |
The Company has recorded an impairment loss on investment in SABA |
valuation methodologies used by the management; |
Investment Limited of H 185.90 crores during the year ended 31st March, |
c) Reconciled the cash flows to the business plans approved by |
2023. Refer note 5 to the standalone financial statements. |
the respective Board of Directors of the identified investee |
Management''s assessment of whether there are impairment indications |
companies; |
and estimate of the recoverable amounts of the identified investments |
d) Evaluated and challenged management''s assumptions such as |
determined through discounted cash flow valuation method requires |
implied growth rates during explicit period, terminal growth rate, |
significant judgment in carrying out the impairment assessment. The |
targeting savings and discount rate for their appropriateness |
key assumptions used in management''s assessment of the recoverable |
based on our understanding of the business of the respective |
amounts include, but are not limited to, projections of future cash |
investee companies, past results and external factors such as |
flows, growth rates, discount rates, estimated future operating and |
industry trends and forecasts, including the possible impact of |
capital expenditure. Changes to these assumptions could lead to material changes in estimated recoverable amounts, resulting in either impairment or reversals of impairment taken in prior years. |
COVID -19 pandemic on such assumptions; e) Obtained and evaluated sensitivity analysis performed by the management on key assumptions of implied growth rates during |
Considering the materiality and the inherent subjectivity which involves significant management judgment in predicting future cash flow projections, recoverability of investments in subsidiaries has been considered to be a key audit matter for the current period audit. |
explicit period, terminal growth rates and discount rates; f) Tested the mathematical accuracy of the management computations with regard to cash flows and sensitivity analysis; g) Performed independent sensitivity analysis of aforesaid key assumptions to assess the effect of reasonably possible variations on the current estimated recoverable amount for each of the identified investments to evaluate sufficiency of headroom between recoverable value and carrying amount; and h) Evaluated the adequacy of disclosures given in the standalone financial statements, including disclosure of significant assumptions, judgements and sensitivity analysis performed, in accordance with applicable accounting standards. Based on the audit procedures performed, we determined that the management''s assertion on the recoverability of investments in subsidiaries is appropriate in the context of the standalone financial statements taken as a whole. |
Revenue from operations: (refer note 1.13 and 26 to the Standalone |
Our audit included, but was not limited to, the following procedures: |
financial statements) |
a) Obtained an understanding of the management''s process for |
The Company recognises revenue from the sales of pharmaceutical |
revenue recognition (from sale to customers, out-licensing |
products to resellers or distributors, out-licensing arrangements and |
arrangements and service fee), judgments in estimation and |
service fee. The Company recognises revenue from product sales when |
accounting treatment of discount schemes, returns, rebates and |
control of the product transfers, generally upon shipment or delivery |
regulatory compliance requirements; |
Key audit matters |
How our audit addressed the key audit matters |
|
to a customer. The Company records product sales net of estimated incentives/discounts, returns, rebates and other related charges. The actual point in time when revenue is recognised varies depending on the specific terms and conditions of the sales contracts entered with customers. |
b) |
Evaluated the design and tested the operating effectiveness of the Company''s internal controls, including general IT controls, key IT application controls exercised by the management, over recognition of revenue and measurement of various discount schemes, returns and rebates; |
Further, the Company has a large number of customers operating in various geographies and sales contracts with customers have a variety of different terms relating to the recognition of revenue, the entitlement to sales rebates, the right to return and price adjustments. Sales arrangements in certain jurisdictions lead to material deductions to |
c) |
Evaluated the terms of the licensing arrangements to determine satisfaction of performance obligations under the contracts for appropriate revenue recognition and tested allocation of consideration between performance obligations to verify deferral of revenue in respect of unsatisfied performance obligations; |
gross sales in arriving at revenue. The Company also has development and commercialisation arrangements relating to research and development of new products. This includes in-licensing and out-licensing arrangements and other types of complex agreements. We identified recognition of revenue |
d) |
Performed substantive testing by selecting samples of revenue transactions pertaining to sale of products during the year, and verified the underlying supporting documents including contracts, agreements, sales invoices and dispatch/shipping documents; |
from operations as a key audit matter because: a) Accrual towards rebates, discounts, returns and allowances is complex and requires significant judgments and estimates in relation to contractual agreements/ commercial terms across |
e) |
Performed cut-off testing procedures by testing samples of revenue transactions recorded during the year in specific periods before and after year end to conclude there has not been overstatement/ understatement of revenue recorded for the year; |
various geographies. Any change in these estimates can have a significant financial impact. b) The nature of development and commercialisation arrangements are often inherently complex and unusual, requiring significant management judgment to be applied in respect of revenue recognition. c) The Company considers revenue as key benchmark for evaluating |
f) |
Obtained management workings for amounts recognised towards discount schemes, returns and rebates during the year and as at year end. On a sample basis, tested the underlying calculations for amounts recorded as accruals and provisions towards the aforementioned obligations, as per the terms of related schemes, contracts and regulations, and traced the underlying data to source documents; |
performances and hence, there is risk of revenue being overstated due to pressure to achieve targets, earning expectations or incentive schemes linked to performance for a reporting period. |
g) Evaluated historical accuracy of the Company''s estimates of year-end accruals pertaining to aforesaid arrangements made in the previous years to identify any management bias; h) Tested all the manual sales-related adjustments made to revenue comprising of variable consideration under Ind AS 115 to ensure the appropriateness of revenue recognition during the year; and i) Evaluated the adequacy of disclosures in the standalone financial statements. Based on audit procedures performed, we determined that the revenue recognition and measurement is appropriate in the context of the standalone financial statements taken as a whole. |
Information other than the Financial Statements and Auditor''s Report thereon
5. The Company''s Board of Directors are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the standalone financial statements and our auditor''s report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
10. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the 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 Board of Directors'' 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
11. 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.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
6. The accompanying standalone financial statements have been approved by the Company''s Board of Directors. The Company''s Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS specified under section 133 of the Act and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
7. In preparing the financial statements, the Board of Directors are 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 the Board of Directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
8. Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.
Auditor''s Responsibilities for the Audit of the Standalone Financial Statements
9. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
12. 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.
13. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our 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
14. As required by section 197(16) of the Act based on our audit, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule V to the Act.
15. As required by the Companies (Auditor''s Report) Order, 2020 (''the Order'') issued by the Central Government of India in terms of section 143(11) of the Act we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
16. Further to our comments in Annexure I, 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 purpose of our audit of the accompanying standalone financial statements;
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 standalone financial statements dealt with by this report are in agreement with the books of account;
d) In our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act;
e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 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 financial statements of the Company as on 31st March, 2023 and the operating effectiveness of such controls, refer to our separate Report in Annexure II wherein we have expressed an unmodified opinion; and
g) With respect to the other matters to be included in the Auditor''s Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us:
i. the Company, as detailed in note 38 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31st March, 2023.;
ii. As detailed in note 52, the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31st March, 2023;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31st March, 2023;
iv. a. The management has represented that, to the best
of its knowledge and belief, other than as disclosed in note 44 (j) and note 44 (k) to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person(s) or entity(ies), including foreign entities (''the intermediaries''), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (''the Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;
b. The management has represented that, to the best of its knowledge and belief, as disclosed in note 44 (f) to the standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (''the Funding Parties''), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified
in any manner whatsoever by or on behalf of the Funding Party (''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
c. Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under sub-clauses (a) and (b) above contain any material misstatement.
v. a. The final dividend paid by the Company during the year ended 31st March, 2023 in respect of such dividend declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend.
b. As stated in note 47 (B) (b) to the accompanying standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year ended 31st March, 2023 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. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 requires all companies which use accounting software for maintaining their books of account, to use such an accounting software which has a feature of audit trail, with effect from the financial year beginning on 1st April, 2023 and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 (as amended) is not applicable for the current financial year.
For Walker Chandiok & Co LLP
Chartered Accountants
Firm''s Registration No.: 001076N/N500013
Ashish Gupta
Partner
Membership No.: 504662
UDIN: 23504662BGWGDY8126
Place: New Delhi
Date: 12th May, 2023
Mar 31, 2022
Basis of opinion
Report on the Audit of the StandaloneFinancial Statements
1. We have audited the accompanying standalone financial statements of Cipla Limited (''the Company''), which comprise the Balance Sheet as at 31st March, 2022, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (''the Act'') in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (''Ind AS'') specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2022, its profit (including other comprehensive income), and its cash flows and the changes in equity for the year ended on that date.
3. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ('' IC AI'') 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 opinion.
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
5. We have determined the matters described below to be the key audit matters to be communicated in our report. |
|
Key audit matter |
How our audit addressed the key audit matter |
Drugs (Prices Control) Orders (DPCO) matters The Company is regulated by National Pharmaceutical Pricing Authority, Government of India (NPPA). There are a number of legal and regulatory cases, of which the most significant Drugs (Prices Control) Orders (DPCO) as disclosed in Note 37(B)(ii) to the standalone financial statements, relating to overcharging of certain drugs under DPCO. According to NPPA''s public disclosure, the total demand against the Company aggregates to H 3,703.40 crores as at 31st March, 2022, of which: a) H 3,456.39 crores relates to matters pending at Honourable Bombay High Court, wherein the Holding Company has deposited H 175.08 crores being 50% of the total demand of H 350.15 crores as at 1st August, 2003 under protest pursuant to direction of Honourable Supreme Court of India; and b) H 247.01 crores relates to other matters, wherein based on facts and legal advice, the Company has recorded a charge of H 7.34 crores (including interest) during the year ended 31st March, 2022 and carries a total provision of H 118.49 crores (including interest) as at 31st March, 2022. |
Our audit of DPCO matters included, but was not limited to, the following procedures: a) Obtained an understanding of the management''s process for updating the status of the matters, assessment of accounting treatment in accordance with Ind AS 37, and for measurement of amounts involved; b) Evaluated the design and tested the operating effectiveness of key controls around above process; c) Inspected correspondence with the Company''s external legal counsel in order to corroborate our understanding of these matters, accompanied by discussions with both internal and external legal counsels. Tested the objectivity and competence of such management experts involved; d) Obtained direct confirmation from the external legal counsel handling DPCO matters with respect to the legal determination of the liability arising from such matters, conclusion of the matters in accordance with the requirements of Ind AS 37 and disclosures to be made in the financial statements. Evaluated the response received from the external legal counsel to ensure that the conclusions reached are supported by sufficient legal rationale; |
Key audit matter |
How our audit addressed the key audit matter |
The amounts involved are material and the application of |
e) Assessed the appropriateness of methods used, and the |
accounting principles as given under Ind AS 37, Provisions, |
reliability of underlying data for the calculations made for |
Contingent Liabilities and Contingent Assets (''Ind AS 37''), in |
quantifying the amounts involved. Tested the arithmetical |
order to determine the amounts to be recognised as liability |
accuracy of such calculations; and |
or to be disclosed as a contingent liability or not, is inherently |
f) Evaluated the Company''s disclosures for adequate disclosure |
subjective and needs careful evaluation and significant judgement to be applied by the management. |
regarding the significant litigations of the Company. Based on the audit procedures performed, the judgements |
Considering the materiality and the inherent subjectivity which |
made by the management were reasonable and disclosures |
involves significant management judgment in predicting the |
made in respect of these matters were appropriate in the |
outcome of the matter, DPCO matters have been considered to be a key audit matter for the current period audit. |
context of the standalone financial statements taken as a whole. |
Revenue from operations: (refer note 1.13 and 25 to the |
Our audit included, but was not limited to, the following |
Standalone financial statements) The Company recognises revenue from the sales of pharmaceutical products to resellers or distributors, out-licensing arrangements |
procedures: a) Obtained an understanding of the management''s process for revenue recognition (from sale to customers, out- |
and service fee. The Company recognises revenue from product sales when control of the product transfers, generally upon shipment or delivery to a customer. The Company |
licensing arrangements and service fee), judgments in estimation and accounting treatment of discount schemes, returns, rebates and regulatory compliance requirements; |
records product sales net of estimated incentives/discounts, |
b) Evaluated the design and tested the operating |
returns, rebates and other related charges. The actual point |
effectiveness of the Company''s internal controls, including |
in time when revenue is recognised varies depending on the |
general IT controls, key IT application controls exercised |
specific terms and conditions of the sales contracts entered |
by the management, over recognition of revenue and |
with customers. |
measurement of various discount schemes, returns and rebates; |
Further, the Company has a large number of customers |
|
operating in various geographies and sales contracts with |
c) Evaluated the terms of the licensing arrangements to |
customers have a variety of different terms relating to the |
determine satisfaction of performance obligations under |
recognition of revenue, the entitlement to sales rebates, the |
the contracts for appropriate revenue recognition and |
right to return and price adjustments. Sales arrangements in |
tested allocation of consideration between performance |
certain jurisdictions lead to material deductions to gross sales |
obligations to verify deferral of revenue in respect of |
in arriving at revenue. |
unsatisfied performance obligations; |
The Company also has development and commercialisation |
d) Performed substantive testing by selecting samples of |
arrangements relating to research and development of |
revenue transactions pertaining to sale of products |
new products. This includes in-licensing and out-licensing |
during the year, and verified the underlying supporting |
arrangements and other types of complex agreements. We identified recognition of revenue from operations as a key |
documents including contracts, agreements, sales invoices and dispatch/shipping documents; |
audit matter because: a) Accrual towards rebates, discounts, returns and allowances |
e) Performed cut-off testing procedures by testing samples of revenue transactions recorded during the year in specific periods before and after year end to conclude |
is complex and requires significant judgments and estimates in relation to contractual agreements/ commercial terms across various geographies. Any change in these estimates |
there has not been overstatement/ understatement of revenue recorded for the year; |
can have a significant financial impact. |
f) Obtained management workings for amounts recognised towards discount schemes, returns and rebates during the |
b) The nature of development and commercialisation |
year and as at year end. On a sample basis, tested the |
arrangements are often inherently complex and unusual, |
underlying calculations for amounts recorded as accruals |
requiring significant management judgment to be applied |
and provisions towards the aforementioned obligations, |
in respect of revenue recognition. |
as per the terms of related schemes, contracts and regulations, and traced the underlying data to source documents; g) Evaluated historical accuracy of the Company''s estimates of year-end accruals pertaining to aforesaid arrangements made in the previous years to identify any management bias; |
Key audit matter |
How our audit addressed the key audit matter |
c) The Company considers revenue as key benchmark |
h) Tested all the manual sales-related adjustments made |
for evaluating performances and hence, there is risk of |
to revenue comprising of variable consideration under |
revenue being overstated due to pressure to achieve |
Ind AS 115 to ensure the appropriateness of revenue |
targets, earning expectations or incentive schemes linked |
recognition during the year; and |
to performance for a reporting period. |
i) Evaluated the adequacy of disclosures in the standalone financial statements. Based on audit procedures performed, we determined that the revenue recognition and measurement is appropriate in the context of the standalone financial statements taken as a whole. |
Recoverability of investments in subsidiaries: |
Our audit included, but was not limited to, the following |
The Company has investments of H 8,877.47 crores in subsidiaries being carried at cost in accordance with Ind AS 27, Separate Financial Statements. The Company assesses the recoverable amounts of each investment when impairment indicators exist by comparing the fair value (less costs of disposal) and carrying amount of that investment as on the reporting date. Management''s assessment of whether there are impairment indications and estimate of the recoverable amounts of the identified investments determined through discounted cash |
procedures: a) Obtained an understanding of the management''s process for identification of impairment indicators and tested the design and operating effectiveness of internal controls over such identification and impairment measurement through fair valuation of identified investments; b) Involved auditor''s experts to assess the appropriateness of the valuation methodologies used by the management; |
flow valuation method requires significant judgment in carrying |
c) Reconciled the cash flows to the business plans approved |
out the impairment assessment. The key assumptions used |
by the respective Board of Directors of the identified |
in management''s assessment of the recoverable amounts |
investee companies; |
include, but are not limited to, projections of future cash flows, |
d) Evaluated and challenged management''s assumptions |
growth rates, discount rates, estimated future operating and |
such as implied growth rates during explicit period, |
capital expenditure. Changes to these assumptions could |
terminal growth rate, targeting savings and discount rate |
lead to material changes in estimated recoverable amounts, |
for their appropriateness based on our understanding of |
resulting in either impairment or reversals of impairment taken |
the business of the respective investee companies, past |
in prior years. |
results and external factors such as industry trends and |
Considering the materiality and the inherent subjectivity |
forecasts, including the possible impact of COVID-19 |
which involves significant management judgment in predicting |
pandemic on such assumptions; |
future cash flow projections, recoverability of investments in |
e) Obtained and evaluated sensitivity analysis performed by |
subsidiaries has been considered to be a key audit matter for |
the management on key assumptions of implied growth |
the current period audit. |
rates during explicit period, terminal growth rates and discount rates; f) Tested the mathematical accuracy of the management computations with regard to cash flows and sensitivity analysis; g) Performed independent sensitivity analysis of aforesaid key assumptions to assess the effect of reasonably possible variations on the current estimated recoverable amount for each of the identified investments to evaluate sufficiency of headroom between recoverable value and carrying amount; and h) Evaluated the adequacy of disclosures given in the standalone financial statements, including disclosure of significant assumptions, judgements and sensitivity analysis performed, in accordance with applicable accounting standards. Based on the audit procedures performed, we determined that the management''s assertion on the recoverability of investments in subsidiaries is appropriate in the context of the standalone financial statements taken as a whole. |
Key audit matter |
How our audit addressed the key audit matter |
Provision for Obsolescence of Inventory (refer note 1.3.2(v), |
Our audit of provision for obsolescence of inventory included, |
1.11 and 9 to the standalone financial statements) |
but was not limited to, the following procedures: |
The Company held inventories aggregating H 3,199.05 crores |
a) Obtained an understanding of management''s process to |
as at 31st March, 2022 comprising of raw materials, work-in- |
identify slow-moving, obsolete and other non-saleable |
progress, stock-in-trade, finished goods, packaging materials |
inventory, and process of consequent measurement of |
and stores, spares and consumables, on which the Company |
required provision for obsolescence. |
has recorded an obsolescence provision amounting to H 494.86 |
b) Evaluated the appropriateness of related accounting |
crores during the current year. |
policies adopted by the Company in accordance with the |
At each reporting period end, the management assesses |
requirements of Ind AS 2 (''Ind AS 2''); |
whether there is any objective evidence indicating that the net |
c) Evaluated the design, implementation and tested the |
realisable value of any item of inventory is below its carrying |
operating effectiveness of key controls that the Company |
value. If so, such inventories are written down to their net realisable value in accordance with the requirements of Ind AS 2, Inventories (''Ind AS 2''). |
has in relation to aforesaid process; d) Evaluated the nature, source and reliability of all the |
information used by the management for arriving at the |
|
The factors that the Company considers in determining the |
estimates for determination of provision for obsolescence |
provision for slow moving, obsolete and other non-saleable inventory include estimated remaining shelf life, product |
of inventory; e) For the provisions made in respect of expired or near- |
discontinuances, price changes, ageing of inventory and introduction of competitive new products, to the extent each of these factors impact the Company''s business and markets. The |
expiry inventory balances, tested such identification from the batch-wise expiry information and reperformed computations to validate the accuracy and completeness |
Company considers all these factors and adjusts the inventory provision to reflect its actual experience on a periodic basis. |
of such provision estimates; f) For the provisions made in respect of other non-saleable |
Considering the inherent nature of the industry, particularly limited useful life of inventories, the aforesaid determination is complex on account of estimation of consumption patterns, |
inventory, discussed with the senior management the triggers taken into account for such identification and evaluated the same in view of our understanding of the |
prescription patterns, alternate product availability, alternate |
business and industry conditions. Assessed the projected |
uses, changing regulations, which involves significant |
sale estimates made by the management in respect |
management judgement and high estimation uncertainty. |
of balance inventory of aforesaid specific products |
This complexity was particularly further increased during the current year due to introduction of certain products in |
that is expected to be sold in the near future, for its appropriateness basis past trends and market conditions. |
Company''s portfolio leading to an increased charge to the Statement of Profit and Loss in the current year as compared |
Further, reperformed computations to validate the accuracy and completeness of such provision estimates; |
to earlier years in this respect. Considering the above, provision for obsolescence of inventory |
and g) Evaluated appropriateness of disclosures made in the |
has been considered as key audit matter for the current period audit. |
financial statements. Based on the audit procedures performed, the management''s assessment provision for obsolescence of inventory balances was determined to be appropriate in the context of the standalone financial statements taken as a whole. |
Information other than the Financial Statements and Auditor''s Report thereon
6. The Company''s Board of Directors are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the standalone financial statements and our auditor''s report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
7. The accompanying standalone financial statements have been approved by the Company''s Board of Directors. The Company''s Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS specified under section 133 of the Act and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
8. In preparing the financial statements, the Board of Directors are 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 the Board of Directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
9. Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.
Auditor''s Responsibilities for the Audit of the Standalone Financial Statements
10. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
11. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3) (i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system 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; and
⢠Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
12. 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.
13. 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.
14. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our 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
15. As required by section 197(16) of the Act based on our audit, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule V to the Act.
16. As required by the Companies (Auditor''s Report) Order, 2020 (''the Order'') issued by the Central Government of India in terms of section 143(11) of the Act we give in the Annexure I, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
17. Further to our comments in Annexure I, 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 purpose of our audit of the accompanying standalone financial statements;
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 standalone financial statements dealt with by this report are in agreement with the books of account;
d) In our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act;
e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 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 financial statements of the Company as on 31st March, 2022 and the operating effectiveness of such controls, refer to our separate Report in Annexure II wherein we have expressed an unmodified opinion; and
g) With respect to the other matters to be included in the Auditor''s Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us:
i. the Company, as detailed in note 37 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31st March, 2022.
ii. As detailed in note 50, the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31st March, 2022;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31st March, 2022;
iv. a. The management has represented that, to the
best of its knowledge and belief, other than as disclosed in note 43 (j) and 43 (k) to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person or entity(ies), including foreign entities (''the intermediaries''),
with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (''the Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;
b. The management has represented that, to the best of its knowledge and belief, as disclosed in note 43 (f) to the standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (''the Funding Parties''), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
c. Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under sub-clauses (a) and (b) above contain any material misstatement.
v. a. The final dividend paid by the Company during the year ended 31st March, 2022 in respect of such dividend declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend.
b. As stated in note 46 (B) (b) to the accompanying standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year ended 31st March, 2022 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.
Chartered Accountants
Firm''s Registration No.: 001076N/N500013
Partner
Membership No.: 504662
Place: Mumbai
Date: 10th May, 2022
Mar 31, 2021
Opinion
1. We have audited the accompanying standalone financial statements of Cipla Limited (''the Company''), which comprise the Balance Sheet as at 31st March, 2021, 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.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (''Act'') in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Indian Accounting Standards (''Ind AS'') specified under Section 133 of the Act, of the state of affairs (financial position) of the Company as at 31st March, 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
3. We conducted our audit in accordance with the Standards on Auditing 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 Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
4. Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
5. We have determined the matters described below to be the key audit matters to be communicated in our report. |
|
Key audit matter |
How our audit addressed the key audit matter |
Drugs (Prices Control) Orders (DPCO) matters: The Company is regulated by National Pharmaceutical Pricing Authority, Government of India (NPPA). There are number of legal and regulatory cases, of which the most significant is under Drugs (Prices Control) Orders (DPCO) as disclosed in Note 39 to the standalone financial statements, relating to overcharging of certain drugs under DPCO. According to NPPA''s public disclosure, the total demand against the Company aggregates to H 3,676.07 crore as at 31st March, 2021, of which: a) H 3,456.39 crore relates to matters pending at Honourable Bombay High Court, wherein the Company has deposited H 175.08 crore being 50% of the total demand of H 350.15 crore as at 1st August, 2003 under protest pursuant to direction of Honourable Supreme Court of India; and |
Our audit of DPCO matters included, but was not limited to, the following procedures: a) Obtained an understanding of the management''s process for updating the status of the matters, assessment of accounting treatment in accordance with Ind AS 37, and for measurement of amounts involved; b) Evaluated the design and tested the operating effectiveness of key controls around above process; c) Inspected correspondence with the Company''s external legal counsel in order to corroborate our understanding of these matters, accompanied by discussions with both internal and external legal counsels. Tested the objectivity and competence of such management experts involved; |
Key audit matter |
How our audit addressed the key audit matter |
|
b) H 219.68 crore relates to other matters, wherein |
d) |
Obtained direct confirmation from the external |
based on facts and legal advice, the Company |
legal counsel handling DPCO matters with respect |
|
has recorded a charge of H 6.89 crore (including |
to the legal determination of the liability arising |
|
interest) during the year ended 31st March, 2021 |
from such litigation, conclusion of the matters |
|
and carries a total provision of H 111.15 crore |
in accordance with the requirements of Ind AS |
|
(including interest) as at 31st March, 2021. |
37 and disclosures to be made in the financial |
|
The amounts involved are material and the application of accounting principles as given under Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets (''Ind AS 37''), in order to determine the amounts |
statements. Evaluated the response received from the external legal counsel to ensure that the conclusions reached are supported by sufficient legal rationale; |
|
to be recognised as liability or to be disclosed as a |
e) |
Assessed the appropriateness of methods used, |
contingent liability or not, is inherently subjective and |
and the reliability of underlying data for the |
|
needs careful evaluation and significant judgement to |
calculations made for quantifying the amounts |
|
be applied by the management. |
involved. Tested the arithmetical accuracy of |
|
Considering the materiality and the inherent |
such calculations; and |
|
subjectivity which involves significant management judgement in predicting the outcome of the matter, DPCO matters have been considered to be a key audit matter for the current period audit. |
f) |
Evaluated the Company''s disclosures for adequate disclosure regarding the significant litigations of the Company. |
Based on the audit procedures performed, the judgements made by the management were reasonable and disclosures made in respect of these matters were appropriate in the context of the standalone financial statements taken as a whole. |
Revenue from operations: (refer note 1 and 27 to the Standalone financial statements)
The Company recognises revenue from the sales of pharmaceutical products to resellers or distributors, out licensing arrangements and service fee. The Company recognises revenue from product sales when control of the product transfers, generally upon shipment or delivery to a customer. The Company records product sales net of estimated incentives/ discounts, returns, rebates and other related charges. The actual point in time when revenue is recognised varies depending on the specific terms and conditions of the sales contracts entered with customers.
Further, the Company has a large number of customers operating in various geographies and sales contracts with customers have a variety of different terms relating to the recognition of revenue, the entitlement to sales rebates, the right to return and price adjustments. Sales arrangements in certain jurisdictions lead to material deductions to gross sales in arriving at revenue.
Our audit included, but was not limited to, the following
procedures:
a) Obtained an understanding of the management''s process for revenue recognition (from sale to customers, out-licensing arrangements and service fee), judgements in estimation and accounting treatment of discount schemes, returns, rebates and regulatory compliance requirements;
b) Evaluated the design and tested the operating effectiveness of the Company''s internal controls, including general IT controls, key IT application controls exercised by the management, over recognition of revenue and measurement of various discount schemes, returns and rebates;
c) Evaluated the terms of the licensing arrangements to determine satisfaction of performance obligations under the contracts for appropriate revenue recognition and tested allocation of consideration between performance obligations to verify deferral of revenue in respect of unsatisfied performance obligations;
Key audit matter |
How our audit addressed the key audit matter |
|
The Company also has development and |
d) |
Performed substantive testing by selecting |
commercialisation arrangements relating to research |
samples of revenue transactions pertaining to |
|
and development of new products. This includes in- |
sale of products during the year, and verified |
|
licensing and out-licensing arrangements and other |
the underlying supporting documents including |
|
types of complex agreements. |
contracts, agreements, sales invoices and dispatch/shipping documents; |
|
We identified the recognition of revenue from |
||
operations as a key audit matter because: |
e) |
Performed cut-off testing procedures by testing samples of revenue transactions recorded during |
a) Accrual towards rebates, discounts, returns and |
the year in specific periods before and after year |
|
allowances is complex and requires significant |
end to conclude there has not been overstatement/ |
|
judgements and estimates in relation to contractual |
understatement of revenue recorded for the year; |
|
agreements/ commercial terms across various |
||
geographies. Any change in these estimates can |
f) |
Obtained management workings for amounts |
have a significant financial impact. |
recognised towards discount schemes, returns and rebates during the year and as at year end. On a |
|
b) The nature of development and commercialisation |
sample basis, tested the underlying calculations |
|
arrangements are often inherently complex |
for amounts recorded as accruals and provisions |
|
and unusual, requiring significant management |
towards the aforementioned obligations, as |
|
judgement to be applied in respect of revenue |
per the terms of related schemes, contracts and |
|
recognition. |
regulations, and traced the underlying data to |
|
c) The Company considers revenue as key benchmark |
source documents; |
|
for evaluating performances and hence, there is |
g) |
Evaluated historical accuracy of the Company''s |
risk of revenue being overstated due to pressure to |
estimates of year-end accruals pertaining to |
|
achieve targets, earning expectations or incentive |
aforesaid arrangements made in the previous |
|
schemes linked to performance for a reporting |
years to identify any management bias; |
|
period. |
||
h) |
Tested all the manual sales-related adjustments |
|
d) Considering the widespread impact of the |
made to revenue comprising of variable |
|
outbreak due to COVID-19, point of transfer of |
consideration under Ind AS 115 to ensure the |
|
goods control (transit days) and probability of |
appropriateness of revenue recognition during |
|
collection from customers was required to be re- |
the year; and |
|
assessed in certain geographies. |
||
i) |
Evaluated the adequacy of disclosures in the standalone financial statements. |
|
Based on audit procedures performed, we determined |
||
that the revenue recognition and measurement is |
||
appropriate in the context of the standalone financial |
||
statements taken as a whole. |
Recoverability of investments in subsidiaries: The Company has investments of H 7,671.38 crore in subsidiaries being carried at cost in accordance with Ind AS 27, Separate Financial Statements. The Company assesses the recoverable amounts of each investment when impairment indicators exist by comparing the fair value (less costs of disposal) and carrying amount of that investment as on the reporting date. |
Our audit included, but was not limited to, the following procedures: a) Obtained an understanding of the management''s process for identification of impairment indicators and tested the design and operating effectiveness of internal controls over such identification and impairment measurement through fair valuation of identified investments; |
Key audit matter |
How our audit addressed the key audit matter |
|
The Company has recorded an impairment loss on |
b) |
Involved auditor''s experts to assess the |
investment in Cipla Biotec Limited (formerly known as |
appropriateness of the valuation methodologies |
|
Cipla Biotec Private Limited) of H 10.88 crore during |
used by the management; |
|
the year ended 31st March, 2021. Refer note 5 to the standalone financial statements. |
c) |
Reconciled the cash flows to the business plans |
Management''s assessment of whether there |
approved by the respective Board of Directors of the identified investee companies; |
|
are impairment indications and estimate of the recoverable amounts of the identified investments |
d) |
Evaluated and challenged management''s |
determined through discounted cash flow valuation |
assumptions such as implied growth rates during |
|
method requires significant management judgement |
explicit period, terminal growth rate, targeting |
|
in carrying out the impairment assessment. The key |
savings and discount rate for their appropriateness |
|
assumptions used in management''s assessment of |
based on our understanding of the business of |
|
the recoverable amounts include, but are not limited |
the respective investee companies, past results |
|
to, projections of future cash flows, growth rates, |
and external factors such as industry trends |
|
discount rates, estimated future operating and capital |
and forecasts, including the possible impact of |
|
expenditure. Changes to these assumptions could |
COVID-19 pandemic on such assumptions; |
|
lead to material changes in estimated recoverable |
e) |
Obtained and evaluated sensitivity analysis |
amounts, resulting in either impairment or reversals of impairment taken in prior years. |
performed by the management on key assumptions |
|
of implied growth rates during explicit period, |
||
Considering the materiality of amounts involved, and |
terminal growth rates and discount rates; |
|
the inherent subjectivity involved in estimating future |
f) |
Tested the mathematical accuracy of the |
cash flows which required significant management |
management computations with regard to cash |
|
judgement, assessment of impairment losses to be |
flows and sensitivity analysis; |
|
recognised, if any, on the carrying value of aforesaid investments has been considered to be a key audit |
g) |
Performed independent sensitivity analysis of |
matter for the current period audit. |
aforesaid key assumptions to assess the effect |
|
h) |
of reasonably possible variations on the current estimated recoverable amount for each of the identified investments to evaluate sufficiency of headroom between recoverable value and carrying amount; and Evaluated the adequacy of disclosures given in |
|
the standalone financial statements, including disclosure of significant assumptions, judgements and sensitivity analysis performed, in accordance with applicable accounting standards. Based on the audit procedures performed, we |
||
determined that the management''s assertion on |
||
the |
recoverability of investments in subsidiaries is |
|
appropriate in the context of the standalone financial |
||
statements taken as a whole. |
6. 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 financial statements and our auditor''s report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
7. The accompanying standalone financial statements have been approved by the Company''s Board of Directors. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Ind AS specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgement and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for
ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
8. In preparing the financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
9. Those Board of Directors is also responsible for overseeing the Company''s financial reporting process.
10. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
11. As part of an audit in accordance with Standards on Auditing, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:
o Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control;
o Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)0) 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;
o Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
o 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; and
o Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
12. 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.
13. 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.
14. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our 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.
15. Based on our audit, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under Section 197 read with Schedule V to the Act.
16. As required by the Companies (Auditor''s Report) Order, 2016 (''the Order'') issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.
17. Further to our comments in Annexure I, 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 purpose of our audit of the accompanying standalone financial statements;
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 standalone financial statements dealt with by this report are in agreement with the books of account;
d) In our opinion, the aforesaid standalone financial statements comply with Ind AS specified under Section 133 of the Act;
e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2021 from being appointed as a director in terms of Section 164(2) of the Act;
f) We have also audited the internal financial controls with reference to financial statements of the Company as on 31st March, 2021 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 14th May, 2021 as per Annexure II expressed unmodified opinion; and
g) With respect to the other matters to be included in the Auditor''s Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us:
i. The Company, as detailed in note 39 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31st March, 2021;
ii. As detailed in note 51 to the standalone financial statements, the Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable losses as at 31st March, 2021;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31st March, 2021; and
iv. The disclosure requirements relating to holdings as well as dealings in specified bank notes were applicable for the period from 8th November, 2016 to 30th December, 2016, which are not relevant to these standalone financial statements. Hence, reporting under this clause is not applicable.
For Walker Chandiok & Co LLP
Chartered Accountants
Firm''s Registration No.: 001076N/N500013
Ashish Gupta
Partner
Membership No.: 504662
UDIN: 21504662AAAADJ4428
Place: New Delhi
Date: 14th May, 2021
Mar 31, 2019
Report on the standalone financial statements
Opinion
1. We have audited the accompanying standalone financial statements of Cipla Limited (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (âActâ) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Indian Accounting Standards (âInd ASâ) specified under Section 133 of the Act, of the state of affairs (financial position) of the Company as at 31st March, 2019, and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditorâs Responsibilities for the Audit of the 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 (âICAIâ) 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 opinion.
Key Audit Matters
4. Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the standalone financial statements for the financial year ended 31st March, 2019 (âthe current periodâ). These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
5. We have determined the matters described below to be the key audit matters to be communicated in our report.
Key audit matter |
How our audit addressed the key audit matter |
DPCO matters: The Company operates in an industry which |
Our audit of DPCO matters included, but was not limited to, the following procedures: |
is regulated by authorities such as National |
a) Obtained an understanding of the managementâs |
Pharmaceutical Pricing Authority, Government of |
process for updating the status of the legal case, |
India (NPPA), The Food and Drug Administration, |
assessment of accounting treatment in accordance |
United States of America (USFDA) and other |
with Ind AS 37, and for measurement of amounts |
regulators in respective countries, which increases inherent compliance and litigation risks. There are |
involved. |
number of legal and regulatory cases, of which the |
b) Evaluated the design and tested the operating |
most significant is a litigation under Drugs (Prices |
effectiveness of key controls around above |
Control) Orders Act (DPCO) as disclosed in Note 39B to the standalone financial statements, relating to overcharging of certain drugs under the DPCO. |
process. |
According to NPPAâs public disclosure, the total |
c) Inspected correspondence with the Companyâs |
demand against the Company aggregates to |
external legal counsel in order to corroborate our |
RS.2,655.09 crore as at 31st March, 2019, of which: |
understanding of these matters, accompanied by |
discussions with both internal and external legal |
|
a) RS.2,457.47 crore relates to matters pending at |
counsels. Tested the objectivity and competence |
Honourable Bombay High Court, wherein the |
of such management experts involved. |
Company has deposited RS.175.08 crore being |
|
50% of the total demand of RS.350.15 crore as at 1st |
d) Obtained direct confirmation from the external |
August, 2003 under protest pursuant to direction |
legal counsel handling DPCO matters with respect |
of Honourable Supreme Court of India; and |
to the legal determination of the liability arising |
from such litigation, and assessment of resulting |
|
b) RS.197.62 crore relates to other matters, wherein |
provision recognised and disclosures to be made |
based on facts and legal advice, the Company |
in the financial statements in accordance with |
has recorded a charge of RS.8.08 crore (including |
requirements of Ind AS 37. Evaluated the response |
interest) during the year ended 31st March, 2019 |
received from the legal counsel to ensure that the |
and carries a total provision of RS.98.49 crore |
conclusions reached are supported by sufficient |
(including interest) as at 31st March, 2019. |
legal rationale. |
The amounts involved are material and the |
e) Assessed the appropriateness of methods used, |
application of accounting principles as given under |
and the reliability of underlying data for the |
Ind AS 37, Provisions, Contingent Liabilities and |
underlying calculations made for quantifying |
Contingent Assets, in order to determine the amount |
the amounts involved. Tested the arithmetical |
to be recognised as a liability or to be disclosed as a |
accuracy of such calculations. |
contingent liability, is inherently subjective, and needs |
|
careful evaluation and judgement to be applied by |
f) Evaluated the Companyâs disclosures for accuracy |
the management. Key judgements are also made |
and adequacy regarding the significant litigations |
by the management in estimating the amount of |
of the Company. |
liabilities, provisions and/or contingent liabilities |
|
related to aforementioned litigation. |
Based on the audit procedures performed, the |
judgements made by management were reasonable |
|
Considering the materiality and the inherent |
and disclosures made in respect of these matters |
subjectivity which involves significant management |
were appropriate in the context of the standalone |
judgement in predicting the outcome of the matter |
financial statements taken as a whole. |
and estimating the potential impact on cash flows in |
|
case of unfavourable outcome, DPCO matters have |
|
been considered to be a key audit matter for the |
|
current period audit. |
|
Recoverability of investments in subsidiaries: |
Our audit included, but was not limited to, the |
following procedures: |
|
The Company has investments in subsidiaries of |
|
RS.3,803.61 crore being carried at cost in accordance |
a) Obtained an understanding of the managementâs |
with Ind AS 27, Separate Financial Statements. The |
process for identification of impairment indicators, |
Company assesses the recoverable amount of each |
and tested the design and operating effectiveness |
investment when impairment indicators exist by |
of internal controls over such identification and |
comparing the fair value and carrying amount of the |
impairment measurement through fair valuation of |
investment as on the reporting date. Refer note 5 to |
each of the identified investments. |
the standalone financial statements. |
Managementâs assessment whether there are |
b) Involved auditorâs experts to assess the |
impairment indicators and determination of the |
appropriateness of the valuation methodologies |
recoverable amounts of the identified investments including the most appropriate valuation method |
used by the management. |
to use discounted cash flow requires estimation and |
c) Reconciled the cash flows to the business plans |
judgement around the underlying business plans |
approved by the respective Board of Directors of |
and assumptions used in valuation methods. The key |
the identified investee companies. |
assumptions used in managementâs assessment of |
d) Evaluated and challenged managementâs |
the recoverable amounts include, but are not limited |
assumptions such as implied growth rates during |
to, projections of future cash flows, growth rates, |
explicit period, terminal growth rate, targeted |
discount rates. Changes to these assumptions could |
savings and discount rate for their appropriateness |
lead to material changes in estimated recoverable |
based on our understanding of the business of |
amounts, resulting in either impairment or reversals |
the respective investee companies, past results |
of impairment taken in prior years. |
and external factors such as industry trends and |
Considering the materiality of amounts involved, and |
forecasts. |
the inherent subjectivity involved in estimating future |
e) Obtained and evaluated sensitivity analysis |
cash flows which required significant management |
performed by the management on key assumptions |
judgement, assessment of impairment losses to be |
of implied growth rates during explicit period, |
recognised, if any, on the carrying value of identified investments has been considered to be a key audit |
terminal growth rate and discount rate. |
matter for the current period audit. |
f) Tested the mathematical accuracy of the management computations with regard to cash flows and sensitivity analysis. g) Performed independent sensitivity analysis of aforesaid key assumptions to assess the effect of reasonably possible variations on the current estimated recoverable amount for each of the identified investments to evaluate sufficiency of headroom between recoverable value and carrying amounts. h) Evaluated the adequacy of disclosures given in the standalone financial statements, including disclosure of significant assumptions, judgements and sensitivity analysis performed, in accordance with applicable accounting standards. Based on the audit procedures performed, we determined that the carrying values of investments in subsidiaries are appropriate in the context of the standalone financial statements taken as a whole. |
Information other than the Financial Statements and Auditorâs Report thereon
6. The Companyâs 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 financial statements and our auditorâs report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management for the Standalone Financial Statements
7. The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Ind AS specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
8. In preparing the financial statements, management is responsible for assessing the Companyâs ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
9. Those Board of Directors are also responsible for overseeing the Companyâs financial reporting process.
Auditorâs Responsibilities for the Audit of the Financial Statements
10. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditorâs report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
11. As part of an audit in accordance with Standards on Auditing, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:
o Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
o Obtain an understanding of internal controls 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 explaining our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
o Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
o Conclude on the appropriateness of managementâs use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companyâs ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditorâs 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 auditorâs report. However, future events or conditions may cause the Company to cease to continue as a going concern.
o Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
12. 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.
13. 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.
14. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditorâs report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
15. As required by Section 197(16) of the Act, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under Section 197 read with Schedule V to the Act.
16. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.
17. Further to our comments in Annexure I, 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 standalone financial statements dealt with by this report are in agreement with the books of account;
d) In our opinion, the aforesaid standalone financial statements comply with Ind AS specified under Section 133 of the Act;
e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2019 from being appointed as a director in terms of Section 164(2) of the Act;
f) We have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as on 31st March, 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 22nd May, 2019 as per Annexure II expressed unmodified opinion;
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, as detailed in Note 39 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31st March, 2019;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31st March, 2019;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31st March, 2019;
iv. The disclosure requirements relating to holdings as well as dealings in specified bank notes were applicable for the period from 8th November, 2016 to 30th December, 2016, which are not relevant to these standalone financial statements. Hence, reporting under this clause is not applicable.
Annexure I
Based on the audit procedures performed for the purpose of reporting a true and fair view on the standalone financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.
(b) The Company has a regular program of physical verification of its property, plant and equipment under which property, plant and equipment are verified 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. In accordance with this program, certain property, plant and equipment were verified during the year and no material discrepancies were noticed on such verification.
(c) The title deeds of all the immovable properties (which are included under the head âproperty, plant and equipmentâ) are held in the name of the Company.
(ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year, except for goods-in-transit and stocks lying with third parties. For stocks lying with third parties at the year-end, written confirmations have been obtained by the management. No material discrepancies were noticed on the aforesaid verification, discrepancies noticed on such verification have been properly dealt with in the books of account.
(iii) The Company has granted interest free unsecured loans to one company covered in the register maintained under Section 189 of the Act; and with respect to the same:
(a) In our opinion the terms and conditions of grant of such loans are not, prima facie, prejudicial to the Companyâs interest.
(b) The schedule of repayment of principal has been stipulated and the receipts of the principal amount are regular;
(c) There is no overdue amount in respect of loans granted to such company.
(iv) In our opinion, the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of loans, investments, guarantees and security.
(v) In our opinion, 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 sub-section (1) of Section 148 of the Act in respect of Companyâs products/services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.
(vii) (a) The Company is regular in depositing undisputed statutory dues including provident fund, employeesâ state insurance, income-tax, goods and service tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, to the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they become payable.
(b) There are no dues in respect of sales-tax, service tax and duty of customs, that have not been deposited with the appropriate authorities on account of any dispute. The dues outstanding in respect of income-tax, duty of excise, goods and service tax and value added tax on account of any dispute, are as follows:
Statement of Disputed Dues
Name of the statute |
Nature of dues |
Amount (in Rs. crores) |
Amount paid under Protest (in Rs. crores) |
Period to which the amount relates |
Forum where dispute is pending |
Income Tax Act, 1961 |
Income tax |
185.51 |
123.70 |
2008-09 2009-10 2013-14 and 2015-16 |
CIT Appeals |
Income Tax Act, 1961 |
Income tax |
61.33 |
61.33 |
2014-15 |
ITAT |
The Central Excise Act, 1944 |
Excise duty |
3.96 |
0.17 |
2015-16 to 2016-17 |
Additional Commissioner |
The Central Excise Act, 1944 |
Excise duty |
1.03 |
0.03 |
2011-12 to 2017-18 |
Assistant Commissioner |
The Central Excise Act, 1944 |
Excise duty |
1.58 |
- |
1999-00 to 2003-04 |
CESTAT (EZB) |
The Central Excise Act, 1944 |
Excise duty |
6.90 |
1.31 |
2010-11 to 2013-14 |
CESTAT (EZB) |
The Central Excise Act, 1944 |
Excise duty |
23.32 |
1.44 |
2007-08 to 2013-14 |
CESTAT (SZB) |
The Central Excise Act, 1944 |
Excise duty |
42.21 |
1.83 |
2014-15 to 2015-16 |
CESTAT (SZB) |
The Central Excise Act, 1944 |
Excise duty |
18.28 |
0.40 |
2000-01 to 2005-06 |
CESTAT (WZB) |
The Central Excise Act, 1944 |
Excise duty |
56.50 |
2.48 |
2007-08 to 2015-16 |
CESTAT (WZB) |
The Central Excise Act, 1944 |
Excise duty |
8.43 |
0.49 |
2007-08 to 2014-15 |
Commissioner (Appeals) |
The Central Excise Act, 1944 |
Excise duty |
0.94 |
0.04 |
2009-10 to 2011-12 |
Deputy Commissioner |
The Central Excise Act, 1944 |
Excise duty |
0.17 |
0.01 |
2001-02 to 2006-07 |
Honâble Bombay High Court |
The Central Excise Act, 1944 |
Excise duty |
0.12 |
- |
2015-16 |
Joint Commissioner |
The Central Excise Act, 1944 |
Excise duty |
0.04 |
- |
2000-01 to 2006-07 |
Honâble Supreme Court |
The Central Goods and Service Tax Act, 2017 |
Central Goods and Service tax (GST) |
0.09 |
2016-17 |
Superintendent of GST, Mumbai |
|
Bihar Vat Act, 2005 |
VAT |
1.15 |
2014-15 to 2016-17 |
Patna Appellate Authority |
|
Goa Vat Act, 2005 |
VAT |
0.12 |
- |
2006-07 |
Directorate, Goa |
Gujarat Vat Act, 2005 |
VAT |
0.38 |
0.13 |
2013-14 |
JCCT -Ahmedabad |
Karnataka Vat Act, 2003 |
VAT |
1.00 |
0.27 |
2012-13 |
Karnataka Appellate Authority |
Maharashtra Vat Act, 2002 |
VAT |
0.45 |
0.07 |
2002-03 to 2013-14 |
Deputy Commissioner |
Rajasthan Vat Act, 2003 |
VAT |
4.35 |
0.42 |
2002-03 to 2012-13 |
Rajasthan Tax Board - Ajmer |
Tamil Nadu Vat Act, 2006 |
VAT |
0.26 |
- |
2011-12 |
Joint Commissioner |
Uttar Pradesh Vat Act, 2008 |
VAT |
0.09 |
0.04 |
2011-12 |
Uttar Pradesh Appellate Authority |
West Bengal Vat Act, 2003 |
VAT |
2.82 |
0.26 |
2001-02 to 2015-16 |
Tribunal/ Commissioner |
(viii) The Company has not defaulted in repayment of loans or borrowings to any bank or financial institution or government during the year. The Company did not have any outstanding debentures during the year.
(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments) and did not have any term loans outstanding during the year. Accordingly, the provisions of clause 3(ix) of the Order are not applicable.
(x) According to the information and explanation given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.
(xi) Managerial remuneration has been paid and provided by the Company in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act read with Schedule V to the Act.
(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.
(xiii) In our opinion all transactions with the related parties are in compliance with Sections 177 and 188 of Act, where applicable, and the requisite details have been disclosed in the standalone financial statements as required by the applicable Ind AS.
(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures. Accordingly, provision of clause 3(xiv) of the Order are not applicable.
(xv) In our opinion, the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.
(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.
Annexure II Independent Auditorâs Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
1. In conjunction with our audit of the standalone financial statements of Cipla Limited (âthe Companyâ) as at and for the year ended 31st March, 2019, we have audited the internal financial controls over financial reporting (âIFCoFRâ) of the Company as at that date.
Managementâs Responsibility for Internal Financial Controls
2. The Companyâs Board of Directors is responsible for establishing and maintaining internal financial controls based on internal control financial reporting criteria established by the Company considering the essential components of internal control stated in the guidance note on audit of Internal Financial Control over Financial Reporting (âthe Guidance Noteâ) issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of the Companyâs business, including adherence to the Companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.
Auditorâs Responsibility
3. Our responsibility is to express an opinion on the Companyâs IFCoFR based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the ICAI and deemed to be prescribed under Section 143(10) of the Act, to the extent applicable to an audit of IFCoFR, and the Guidance Note issued by the ICAI.
Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate IFCoFR were established and maintained and if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the IFCoFR and their operating effectiveness. Our audit of IFCoFR includes obtaining an understanding of IFCoFR, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs IFCoFR.
Meaning of Internal Financial Controls over Financial Reporting
6. A companyâs IFCoFR is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs IFCoFR include those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companyâs assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
7. Because of the inherent limitations of IFCoFR, 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 IFCoFR to future periods are subject to the risk that the IFCoFR may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
8. In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting and such controls were operating effectively as at 31st MarcRs.2019, based on 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 Control over Financial Reporting issued by the ICAI.
For Walker Chandiok & Co LLP
Chartered Accountants
Firmâs Registration No.: 001076N/N500013
Ashish Gupta
Partner
Membership No.: 504662
Place: New Delhi
Date: 22nd May, 2019
Mar 31, 2018
Report on the standalone financial statements
1. We have audited the accompanying standalone financial statements of Cipla Limited (âthe Companyâ), which comprise the Balance Sheet as at 31 March 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Managementâs responsibility for the standalone financial statements
2. 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 financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (âInd ASâ) specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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.
Auditorâs responsibility
3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.
4. 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.
5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether these standalone financial statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditorâs 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 controls relevant to the Companyâs preparation of the 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 financial statements.
7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on these standalone financial statements.
Opinion
8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Ind AS specified under Section 133 of the Act, of the state of affairs (financial position) of the Company as at 31 March 2018, and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Report on other legal and regulatory requirements
9. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.
10. Further to our comments in Annexure I, 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 standalone financial statements dealt with by this report are in agreement with the books of account;
d) In our opinion, the aforesaid standalone financial statements comply with Ind AS specified under Section 133 of the Act;
e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2018 from being appointed as a director in terms of Section 164(2) of the Act;
f) We have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as on 31 March 2018 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 22 May 2018 as per Annexure II expressed an unmodified opinion.
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, as detailed in Note 40 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There has no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
iv. The disclosure requirements relating to holdings as well as dealings in specified bank notes were applicable for the period from 8 November 2016 to 30 December 2016 which are not relevant to these standalone financial statements. Hence, reporting under this clause is not applicable.
Annexure I to the Independent Auditorâs Report of even date to the members of Cipla Limited, on the standalone financial statements for the year ended 31 March 2018
Annexure I
Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.
(b) The Company has a regular program of physical verification of its fixed assets under which fixed assets are verified 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. In accordance with this program, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification.
(c) The title deeds of all the immovable properties (which are included under the head âProperty, plant and equipmentâ) are held in the name of the Company.
(ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies between physical inventory and book records were noticed on such verification. Discrepancies noticed on physical verification have been properly dealt with in the books of account.
(iii) The Company has granted interest free unsecured loans to one company covered in the register maintained under Section 189 of the Act; and with respect to the same:
(a) In our opinion the terms and conditions of grant of such loans are not, prima facie, prejudicial to the companyâs interest.
(b) The schedule of repayment of principal has been stipulated and the receipts of the principal amount are regular;
(c) There is no overdue amount in respect of loans granted.
(iv) In our opinion, the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of loans given, investments made, guarantees and security.
(v) In our opinion, 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 sub-section (1) of Section 148 of the Act in respect of Companyâs products and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.
(vii) (a) The Company is regular in depositing undisputed statutory dues including provident fund, employeesâ state insurance, income-tax, goods and service tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, to the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they become payable.
(b) There are no dues in respect of sales-tax, service tax and duty of customs, that have not been deposited with the appropriate authorities on account of any dispute.
The dues outstanding in respect of income-tax, duty of excise and value added tax on account of any dispute, are as follows:
Statement of Disputed Dues
Name of the statute |
Nature of dues |
Amount (Rs. in crore) |
Amount paid under Protest (Rs. in crore) |
Period to which the amount relates |
Forum where dispute is pending |
Income Tax Act, 1961 |
Income tax |
265.13 |
183.08 |
2008-09 to 2014-15 |
CIT Appeals |
The Central Excise Act, 1944 |
Excise duty |
65 |
2 |
2008-09 to 2015-16 |
CESTAT Bangalore |
The Central Excise Act, 1944 |
Excise duty |
3 |
- |
2007-08 to 2014-15 |
Commissioner Appeals |
The Central Excise Act, 1944 |
Excise duty |
40 |
2 |
2007-08 to 2015-16 |
CESTAT Mumbai |
The Central Excise Act, 1944 |
Excise duty |
7 |
1 |
2011-12 to 2013-14 |
CESTAT Kolkata |
The Central Excise Act, 1944 |
Excise duty |
1 |
- |
2015-16 to 2016-17 |
Additional Commissioner |
The Central Excise Act, 1944 |
Excise duty |
8 |
- |
2015-16 to 2017-18 |
Principal Commissioner |
Bihar Vat Act, 2005 |
VAT |
1 |
- |
2013-14 |
Tribunal |
Bihar Vat Act, 2005 |
VAT |
1 |
- |
2014-15 to 2016-17 |
Appeal Court |
Gujarat Vat Act, 2005 |
VAT |
14 |
- |
2013-14 |
JCCT- Ahmedabad |
Maharashtra Value Added Tax, 2002 |
VAT |
1 |
- |
2002-03 to 2012-13 |
DY. Commissioner of Sales tax-LTU |
Rajasthan Vat Act, 2003 |
VAT |
1 |
- |
2002-03 to 2012-13 |
Rajasthan Tax Board - Ajmer |
Rajasthan Vat Act, 2003 |
VAT |
3 |
- |
2008-09 to 2012-13 |
Rajasthan Tax Board - Ajmer |
(viii) The Company has not defaulted in repayment of loans or borrowings to any bank or financial institutions or government during the year. The Company did not have any outstanding debentures during the year.
(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments) and did not have any term loans outstanding during the year. Accordingly, the provisions of clause 3(ix) of the Order are not applicable.
(x) According to the information and explanation given us, no fraud by the Company or on the company by its officers or employees has been noticed or reported during the period covered by our audit.
(xi) Managerial remuneration has been paid and provided by the company in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act read with Schedule V to the Act.
(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.
(xiii) In our opinion all transactions with the related parties are in compliance with Sections 177 and 188 of Act, where applicable, and the requisite details have been disclosed in the financial statements etc., as required by the applicable Ind AS.
(xiv) During the year, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures. Accordingly, provision of clause 3(xiv) of the order are not applicable.
(xv) In our opinion, the company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.
(xvi) The company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.
For Walker Chandiok & Co LLP
Chartered Accountants
Firmâs Registration No.: 001076N/N500013
Ashish Gupta
Partner
Membership No.: 504662
Place: New Delhi
Date: 22 May 2018
Mar 31, 2017
Report on the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of Cipla Limited (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2017, 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 Financial Statements
2. 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 financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (âInd ASâ) specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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.
Auditorâs Responsibility
3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.
4. 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.
5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether these standalone financial statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditorâs 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 controls relevant to the Companyâs preparation of the 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 financial statements.
7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on these standalone financial statements.
Opinion
8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Ind AS specified under Section 133 of the Act, of the state of affairs (financial position) of the Company as at 31st March, 2017, and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Other Matter
9. The comparative financial information for the year ended 31st March, 2016 and the transition date opening balance sheet as at 1st April, 2015 prepared in accordance with Ind AS included in these standalone financial statements, are based on the previously issued statutory financial statements for the year ended 31st March, 2016 and 31st March,
2015 respectively prepared in accordance with Accounting Standards prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) which were audited by the predecessor auditor whose reports dated 24th May, 2016 and 29th May, 2015 respectively expressed unmodified opinion on those standalone financial statements, and have been adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS, which have been audited by us. Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
10. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure I, a statement on the matters specified in paragraphs 3 and 4 of the Order.
11. Further to our comments in Annexure I, 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 standalone financial statements dealt with by this report are in agreement with the books of account;
d) In our opinion, the aforesaid standalone financial statements comply with Ind AS specified under Section 133 of the Act;
e) On the basis of the written representations received from the directors and 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) We have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as on 31st March, 2017 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 25thMay, 2017 as per Annexure II expressed unmodified opinion;
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, as detailed in note 43 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company;
iv. The Company, as detailed in note 54 to the standalone financial statements, has made requisite disclosures in these standalone financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016. Based on the audit procedures performed and taking into consideration the information and explanations given to us, in our opinion, these are in accordance with the books of account maintained by the Company.
AnnexureI
Based on the audit procedures performed for the purpose of reporting a true and fair view on the standalone financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.
(b) The Company has a regular program of physical verification of its fixed assets under which fixed assets are verified 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. In accordance with this program, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification.
(c) The title deeds of all the immovable properties (which are included under the head âProperty, plant and equipmentâ) are held in the name of the Company.
(ii) In our opinion, management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies between physical inventory and book records were noticed on physical verification.
(iii) The Company has granted interest free unsecured loan to one company, and interest bearing unsecured loan to one company, which are covered in register maintained under section 189 of the Companies Act, 2013. With respect to these loans:
(a) In our opinion the terms and conditions of grant of such loans are not prejudicial to the companyâs interest.
(b) The schedule and repayment of principal for interest free loan and non-interest free loan are stipulated. The borrowers have been regular in the payment of principal and interest as stipulated.
(c) There are no overdue loans in respect of loans granted.
(iv) In our opinion, the Company has complied with the provisions of Sections 185 and 186 of the Act, with respect to loans given, investments made and guarantees and securities given.
(v) In our opinion, 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 sub-section (1) of Section 148 of the Act in respect of Companyâs products and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.
(vii) (a) The Company is regular in depositing undisputed statutory dues including provident fund, employeesâ state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, to the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year end for a period of more than six months from the date they become payable.
(b) There are no dues in respect of duty of customs, and Cess that have not been deposited with the appropriate authorities on account of any dispute.
The particulars of dues outstanding in respect of income tax, sales tax, service tax, value added tax (âVATâ) and duty of excise that have not been deposited on account of any dispute as at 31st March, 2017 and forum where these disputes are pending, are as follows:
Statement of Disputed Dues
Name of the statute |
Nature of dues |
Amount (Rs. in crore) |
Amount paid under Protest (Rs. in crore) |
Period to which the amount relates |
Forum where dispute is pending |
The Central Excise Act, 1944 |
Excise Duty |
64 67 |
2008-09 -2015-16 |
CESTAT (Karnataka) |
|
6 70 |
2011-12 -2013-14 |
CESTAT (Kolkata) |
|||
40 61 |
2006-07 -2015-16 |
CESTAT (Mumbai) |
|||
2 36 |
2005-06 -2015-16 |
Commissioner Appeals Pune |
|||
2.54 |
0.13 |
2008-09 -2014-15 |
Commissioner Appeals Bangalore |
||
0.02 |
0.01 |
2001-02 -2006-07 |
High Court -Mumbai |
||
Maharashtra Vat Act, 2002 |
VAT |
0 04 |
- |
2002-03 |
Jt. Commissioner of Sales - Nagpur |
0.41 |
- |
2006-07 -2007-08 |
Dy. Commissioner of Sales Tax - LTU |
||
Goa VAT Act, 2005 |
VAT |
0.49 |
- |
2005-06 |
Directorate of Commercial Taxes, Govt. of Goa |
Tamil Nadu Vat Act, 2006 |
VAT |
0.26 |
- |
2011-12 |
Office of Joint Commissioner -Chennai |
Gujarat Vat Act, 2005 |
VAT |
040 |
- |
2012-13 |
Assessing Officer |
Uttar Pradesh Vat Act, 2008 |
VAT |
0 14 |
- |
2007-08 |
Appeal Court |
West Bengal Vat Act, 2003 |
VAT |
0 71 |
0 02 |
2001-02 |
Tribunal |
Income Tax Act, 1961 |
Income Tax |
64.81 |
64 81 |
2011-14 |
CIT Appeals |
32.04 |
32 04 |
1995-96 to 2010-11 |
High Court |
||
3.44 |
3 44 |
1994-95 to 2009-10 |
Various |
(viii) The Company has not defaulted in repayment of loans or borrowings to any financial institution or a bank.
(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments) and did not have any term loans outstanding during the year. Accordingly, the provisions of clause 3(ix) of the Order are not applicable.
(x) According to the information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.
(xi) Managerial remuneration has been paid and provided by the Company in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act read with Schedule V to the Act.
(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.
(xiii) I n our opinion all transactions with the related parties are in compliance with Sections 177 and 188 of Act, where applicable, and the requisite details have been disclosed in the financial statements etc., as required by the applicable Ind AS.
(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures. Accordingly, provisions of clause 3(xiv) of the Order are not applicable.
(xv) In our opinion, the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.
(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.
For Walker Chandiok & Co LLP
Chartered Accountants
Firmâs Registration No.: 001076N/N500013
per Ashish Gupta
Partner
Membership No.: 504662
Place: New Delhi
Date: 25th May, 2017
Mar 31, 2016
1. We have audited the accompanying standalone financial statements of
Cipla Limited ("the Company"), which comprises the Balance Sheet as at
31st March 2016, the Statement of Profit and Loss, the Cash Flow
Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information.
Management''s Responsibility for the Standalone Financial Statements
2. The Company''s Board of Directors is responsible for the matters
stated in sub-section (5) of section 134 of the Companies Act, 2013
("the Act") with respect to the preparation of these standalone
financial statements that give a true and fair view of the financial
position, financial performance and cash flows of the Company in
accordance with the accounting principles generally accepted in India,
including 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, preventing and detecting frauds and other
irregularities; selection and application of appropriate accounting
policies; making judgements and estimates that are reasonable and
prudent; and design, implementation and maintenance of adequate
internal financial controls, that were operating effectively for
ensuring the accuracy and completeness of the accounting records,
relevant to the preparation and presentation of the financial
statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
Auditor''s Responsibility
3. Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
4. 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.
5. We conducted our audit in accordance with the Standards on Auditing
specified under sub-section (10) of section 143 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.
6. 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 judgement, 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. 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.
7. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
standalone financial statements.
Opinion
8. In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid standalone 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 2016, and its profits and its
cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
9. 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 Annexure 1, a
statement on the matters specified in paragraph 3 and 4 of the Order,
to the extent applicable.
10. Further to our comments in Annexure 1, as required by sub-section
(3) of section 143 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, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account;
d. in our opinion, the aforesaid standalone financial statements
comply with the Accounting Standards specified under section 133 of the
Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
e. on the basis of the written representations received from the
directors as on 31st March 2016 taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March 2016
from being appointed as a director in terms of sub-section (2) of
section 164 of the Act;
f. with respect to the adequacy of the internal financial controls
over financial reporting of the Company and the operating effectiveness
of such controls, refer to our separate report in ''Annexure 2'';
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 financial statements - Refer Notes 37, 38 and
39 to the financial statements;
ii. the Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses;
iii. there has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Annexure 1 to the Independent Auditors'' Report
Based on the audit procedures performed for the purpose of reporting a
true and fair view on the standalone financial statements of the
Company and taking into consideration the information and explanations
given to us and the books of account and other records examined by us
in the normal course of audit, and in our opinion, we report that:
1. a. The Company has generally maintained proper records showing
full particulars, including quantitative details and situation of fixed
assets, other than situation of furniture and fixtures and office
equipments where the situation recorded is the location of the
Company''s different establishments.
b. The Company has a policy of physically verifying its fixed assets
in a phased manner to cover all the assets of the Company in a block of
three years, which in our opinion, is reasonable having regard to the
size of the Company and the nature of its business. During the year,
some of the fixed assets have been physically verified by the
Management and discrepancies noticed during the physical verification,
which were not material, have been appropriately dealt with in the
books of account.
c. The title deeds of the immovable properties are held in the name of
the Company.
2. The inventory has been physically verified by the Management at
reasonable intervals during the year. The verification was done on the
basis of the perpetual inventory system operated by the Company. The
discrepancies noticed on physical verification of inventory, as
compared with the book records, were not material and have been
properly dealt with in the books of account. In case of materials lying
with third parties, certificates confirming such inventory have been
obtained by the Company from most of the third parties.
3. The Company has granted interest free unsecured loan to one
company, and interest bearing unsecured loans to two companies, which
are covered in the Register maintained under section 189 of the
Companies Act, 2013. With respect to these loans:
a. The terms and conditions on which the loans had been granted were
not, prima facie, prejudicial to the Company''s interest.
b. The schedule of repayment of principal, in case of interest free
loan and schedule of repayment of principal and interest, in case of
interest bearing loans are stipulated. The borrowers have been regular
in the payment of the principal and interest as stipulated.
c. There are no overdue loans in respect of loans granted.
4. The Company has complied with provisions of sections 185 and 186 of
the Act, with respect to loans given, investments made, or any
guarantees or securities given.
5. The Company has not accepted any deposits from public. Accordingly,
this clause is not applicable.
6. 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 sub-section (1) of section 148 of the
Act in respect of its products and are of the opinion that, prima
facie, the prescribed accounts and records have been made and
maintained. However, we have not carried out a detailed examination of
the accounts and records with a view to determine whether these are
accurate or complete.
7. a. The Company has been regular in deposit in gun disputed
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 any other material statutory dues
applicable to it with the appropriate authorities. There were no
undisputed arrears that were outstanding as at 31st March 2016 for a
period of more than six months from the date they became payable.
b. There were no dues in respect of Wealth Tax, Income Tax, Service
Tax, Customs Duty, and Cess that have not been deposited with the
appropriate authorities on account of dispute.
The particulars of dues towards Excise Duty, Sales Tax and Service Tax
that have not been deposited on account of dispute as at 31st March
2016 and the forum where these disputes are pending are as follows:
Name of the statute Nature of dues Financial years to
which the matter
pertains
The Central Excise Act, Excise Duty 2000-01 to 2014-15
1944
Finance Act, 1994 Service Tax 2003-04 to 2012-13
State Sales Tax Acts Sales Tax 2001-02 to 2013-14
Name of the Statute Forum where the Amount
dispute is pending Rs. in crore
The Central Excise Act,1944 CESTAT/High Court/ 136.66
Commissioner
Finance Act, 1994 Commissioner 25.09
State Sales Tax Acts State Sales Tax 2.34
Tribunal/joint
Commissioner
8. The Company has not defaulted in repayment of dues to any financial
institutions or banks.
9. The Company did not raise any money by way of initial public offer
(including debt instruments) or further public offer and term loans
during the year. Accordingly, this clause is not applicable.
10. No material fraud by the Company or on the Company by its officers
or employees has been noticed or reported during the course of our
audit.
11. The Company has paid/provided for managerial remuneration in
accordance with the requisite approvals as mandated by the provisions
of section 197 read with Schedule V of the Act.
12. The Company is not a Nidhi Company. Accordingly, this clause is
not applicable.
13. All transactions with related parties are in compliance with
section 177 and section 188 of the Companies Act, 2013 where
applicable, and details of such transactions have been disclosed in the
financial statements as required by the applicable accounting
standards.
14. The Company has not made any preferential allotment or private
placement of shares or fully or partly convertible debentures during
the year. Accordingly, this clause is not applicable.
15. The Company has not entered into any non-cash transactions with
directors or persons connected with them.
16. The Company is not required to be registered under section 45-IA
of the Reserve Bank of India Act, 1934.
For V. Sankar Aiyar & Co. For R.G.N. Price & Co.
Chartered Accountants Chartered Accountants
Firm Reg No. 109208W Firm Reg No. 002785S
V. Mohan R. Rangarajan
Partner Partner
Membership No. 17748 Membership No. 41883
Mumbai, 24th May 2016 Mumbai, 24th May 2016
Mar 31, 2015
1. We have audited the accompanying standalone financial statements of
Cipla Limited ("the Company"), which comprises 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 significant
accounting policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements
2. The Company's Board of Directors is responsible for the matters
stated in sub-section (5) of section 134 of the Companies Act, 2013
("the Act") with respect to the preparation of these standalone
financial statements that give a true and fair view of the financial
position, financial performance and cash flows of the Company in
accordance with the accounting principles generally accepted in India,
including 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 judgements and estimates that are reasonable and
prudent; and design, implementation and maintenance internal financial
controls, that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation ofthe financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
3. Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
4. 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.
5. We conducted our audit in accordance with the Standards on Auditing
specified under sub-section (10) of section 143 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.
6. 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 judgement, 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.
7. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
standalone financial statements.
Opinion
8. In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid standalone 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 profits and its
cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
9. As required by the Companies (Auditor's Report) Order 2015 ("the
Order") issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Act, we give in the Annexure a
statement on the matters specified in paragraph 3 and 4 of the Order,
to the extent applicable.
10. As required by sub-section (3) of section 143 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, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account;
d. in our opinion, the aforesaid standalone financial statements comply
with the Accounting Standards specified under section 133 of the Act,
read with Rule 7 of the Companies (Accounts) Rules, 2014;
e. on the basis of 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 sub-section (2) of
section 164 of the Act;
f. with respect to the other matters to be included in the Auditor's
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. the Company has disclosed the impact of pending litigations on its
financial position in its financial statements - Refer Notes 36, 37 &
38 to the financial statements;
ii. the Company did not have any long term contracts including
derivative contracts for which there were any material foreseeable
losses;
iii. there has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Annexure to the Independent Auditors' Report
(Referred to under the heading of "Report on Other Legal and Regulatory
Requirements" of our Independent Auditors Report to the Members of
Cipla Limited on the Standalone Financial Statements for the year ended
31st March 2015)
1. a. The Company has generally maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets, other than situation of furniture and fixtures and office
equipments where the situation recorded is the location of the Company's
different establishments.
b. The Company has a policy of physically verifying its fixed assets in
a phased manner to cover all the assets of the Company in a block of
three years, which in our opinion, is reasonable having regard to the
size of the Company and the nature of its business. During the year,
some of the fixed assets have been physically verified by the
Management and discrepancies noticed during the physical verification,
which were not material, have been appropriately dealt with in the
books of account.
2. a. The inventory has been physically verified by the Management at
reasonable intervals during the year. The verification was done on the
basis of the perpetual inventory system operated by the Company. In case
of materials lying with third parties, certificates confirming such
inventory have been obtained by the Company from most of the third
parties.
b. In our opinion and on the basis of the information and explanations
given to us, the procedures for physical verification of inventory
followed by the Management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
c. On the basis of our examination of the inventory records, in our
opinion, the Company has maintained proper records of inventory. The
discrepancies noticed on physical verification of inventory, as
compared with the book records, were not material and have been
properly dealt with in the books of account.
3. According to the information and explanations provided to us, the
Company has granted unsecured loans aggregating to Rs277.60 crore to
two parties covered by the Register maintained under section 189 of the
Act and amount outstanding from these parties at the end of the year
totalled to RS259.15 crore which are repayable within 3 to 6 years. Out
of these, interest free unsecured loans totalling to RS224.15 crore
were given to a wholly owned subsidiary prior to 1st April 2014.
Receipt of principal and interest wherever applicable is regular as
stipulated.
4. In our opinion and according to the information and explanations
given to us, having regard to the explanation that purchase of certain
items of inventory and fixed assets are for the Company's specialized
requirements and similarly, certain goods sold are for the specialized
requirements of the buyers and suitable alternate sources are not
available to obtain comparable quotations there is generally adequate
internal control system commensurate with the size of the Company and
the nature of its business for the purchase of inventory & fixed assets
and for the sale of goods & services. In our opinion and according to
the information and explanations given to us, we have not observed any
major weakness during the course of audit.
5. In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposits from the public
within the meaning of sections 73 to 76 or any other relevant
provisions of the Act and the rules framed thereunder.
6. 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 sub-section (1) of section 148 of the
Act in respect of its products and are of the opinion that, prima
facie, the prescribed accounts and records have been made and
maintained. However, we have not carried out a detailed examination of
the accounts and records with a view to determine whether these are
accurate or complete.
7. a. According to the information and explanations provided to us and
the records of the Company examined by us, in our opinion, the Company
was 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 any
other material statutory dues applicable to it with the appropriate
authorities. There were no undisputed arrears that were outstanding as
at 31st March 2015 for a period of more than six months from the date
they became payable.
b. According to the information and explanations given to us and based
on the records of the Company examined by us, as on 31st March 2015,
there were no dues in respect of Wealth Tax, Income Tax, Service Tax,
Customs Duty, Cess that have not been deposited with the appropriate
authorities on account of dispute.
The particulars of dues towards Excise Duty, Sales Tax and Service Tax
that have not been deposited on account of dispute as at 31st March
2015 and the forum where these disputes are pending are as follows:
Name of the statute Nature of dues Financial years to
which the matter
pertains
The Central Excise Act, Excise Duty 2000-01 to 2012-13
1944
Finance Act, 1994 Service Tax 2003-04 to 2012-13
State Sales Tax Acts Sales Tax 2001-02 to 2013-14
Name of the statute Forum where the Amount
dispute is pending RS in crore
The Central Excise Act, CESTAT/High Court 76.67
1944
Finance Act, 1994 Commissioner 25.09
State Sales Tax Acts State Sales Tax Tribunal/ 5.66
Joint Commissioner
c. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company in accordance with the relevant provisions of the Companies
Act, 1956 (1 of 1956) and rules made thereunder have been transferred
to such fund within time.
8. The Company does not have accumulated losses at the end of the
financial year and has not incurred cash losses in the financial year
under report or in the immediately preceding financial year.
9. According to the information and explanations given to us and based
on our audit procedures, the Company has not defaulted in repayment of
dues to any financial institution or bank.
10. According to the information and explanations given to us and the
representations made by the Management, the Company has not given any
guarantee for loans taken by others from banks or financial
institutions.
11. The Company has not availed any term loan during the year.
12. During the course of our examination of the books of account and
records of the Company and according to the information and
explanations given to us, no material fraud on or by the Company has
been noticed or reported by the Company during the year.
For V. Sankar Aiyar & Co. For R.G.N. Price & Co.
Chartered Accountants Chartered Accountants
Firm Reg No. 109208W Firm Reg No. 002785S
V. Mohan R. Rangarajan
Partner Partner
Membership No. 17748 Membership No. 41883
Mumbai, 29th May 2015 Mumbai, 29th May 2015
Mar 31, 2014
1. We have audited the accompanying financial statements of Cipla
Limited ("the Company"), which comprises the Balance Sheet as at 31st
March 2014, the Statement of Profit and Loss and Cash Flow Statement
for the year then ended, and a summary of significant accounting
policies and other explanatory information.
Management''s Responsibility for the Financial Statements
2. 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 principles generally accepted in
India including Accounting Standards referred to in sub-section (3C) of
section 211 of the Companies Act, 1956 ("the Act") read with the
General Circular 15/2013 dated 13th September 2013 of the Ministry of
Corporate Affairs in respect of section 133 of the Companies Act, 2013.
This responsibility includes the design, implementation and maintenance
of internal control relevant to the preparation and presentation of the
financial statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.
Auditor''s Responsibility
3. Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
4. 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 judgement, 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 entity''s internal control. An audit also includes
evaluating the appropriateness of 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.
5. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
6. In our opinion and to the best of our information and according to
the explanations given to us, the financial statements give the
information required by the Act in the manner so required and give a
true and fair view in conformity with the accounting principles
generally accepted in India:
i. in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 2014;
ii. in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
iii. in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Report on Other Legal and Regulatory Requirements
7. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act and on the basis of such
checks of the books and records of the Company as we considered
appropriate and according to the information and explanations given to
us, we give in theAnnexurea statement on the matters specified in
paragraphs 4 and 5 of the Order.
8. As required by sub-section (3) of section Til ot the Act, we report
that:
a. we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
b. in our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;
c. the Balance Sheet, 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
referred to in sub-section (3C) of section 211 of the Act read with the
General Circular 15/2013 dated 13th September 2013 of the Ministry of
Corporate Affairs in respect of section 133 of the Companies Act, 2013;
e. on the basis of 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 clause (g) of sub-section (1) of
section 274 of the Act.
ANNEXURE TO THE INDEPENDENT AUDITORS''REPORT (Referred to in Paragraph 7
under the heading of "Report on Other Legal and Regulatory
Requirements" of our report of even date to the Members ofCipla
Limited)
1. a. The Company has generally maintained proper records showing
full particulars including quantitative details
and situation of fixed assets, other than situation of furniture and
fixtures and office equipment where the situation recorded is the
location of the Company''s different establishments.
b. The Company has a policy of physically verifying its fixed assets
in a phased manner to cover all the assets of the Company in a block of
three years, which in our opinion, is reasonable having regard to the
size of the Company and the nature of its business. During the year,
some of the fixed assets have been physically verified by the
Management and discrepancies noticed during the physical verification,
which were not material, have been appropriately dealt with in the
books of account.
c. The fixed assets that have been sold/disposed off during the year
do not constitute a substantial part of the total fixed assets of the
Company. Hence, the going concern concept has not been affected.
2. a. The inventory has been physically verified by the Management at
reasonable intervals during the year. The verification was done on the
basis of the perpetual inventory system operated by the Company. In
case of materials lying with third parties, certificates confirming
such inventory have been obtained by the Company from most of the third
parties.
b. In our opinion and on the basis of the information and explanations
given to us, the procedures for physical verification of inventory
followed by the Management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
c. On the basis of our examination of the inventory records, in our
opinion, the Company has maintained proper records of inventory. The
discrepancies noticed on physical verification of inventory, as
compared with the book records, were not material and have been
properly dealt with in the books of account.
3. As informed to us, the Company has not granted or taken any loans,
secured or unsecured, to or from companies, firms or other parties
listed in the Register maintained under section 301 of the Act.
Consequently, the requirements of clause (iii) of paragraph 4 of the
Order are not applicable to the Company.
4. In our opinion and according to the information and explanations
given to us, there are generally adequate internal control systems
commensurate with the size of the Company and the nature of its
business for purchase of inventory and fixed assets and for the sale of
goods and services. Further, on the basis of our examination of the
books and records of the Company and according to the information and
explanations given to us during the course of audit, we have not
observed any continuing failure to correct major weaknesses in such
internal control systems.
5. a. In our opinion and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in section 301 of the Act have been entered in the Register
required to be maintained under that section.
b. In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
agreements referred to in 5.a. above and exceeding the value of rupees
five lakhs in respect of any party during the year have been made at
prices which are reasonable having regard to the prevailing market
prices at the relevant time.
6. In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposits from the public
within the meaning of section 58A, 58AA or any other relevant
provisions of the Act and Compa nies (Acceptance of Deposits) Rules,
1975.
7. In our opinion, the Company has an internal audit system
commensurate with its size and the nature of its business.
8. 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 Act in
respect of its products and are of the opinion that, prima facie, the
prescribed accounts and records have been made and maintained. However,
we have not carried out a detailed examination of the accounts and
records with a view to determine whether these are accurate or
complete.
9. a. According to the information and explanations provided to us
and the records of the Company examined by us, in our opinion, the
Company was 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. There were no undisputed
arrears that were outstanding as at 31st March 2014 for a period of
more than six months from the date they became payable.
b. According to the information and explanations given to us and based
on the records of the Company examined by us, as on 31st March 2014,
there were no dues in respect of Wealth Tax, Income Tax and Customs
Duty that have not been deposited with the appropriate authorities on
account of dispute.
The particulars of dues towards Excise Duty, Sales Tax and Service Tax
that have not been deposited on account of dispute as at 31st March
2014 and the forum where these disputes are pending are as follows:
Name of the statute Nature of dues Financial years to
which the matter
pertains
The Central Excise
Act, Excise Duty 2000-01 to
1944 2012-13
Finance Act, 1994 Service Tax 2004-05 to
2012-13
State Sales Tax Acts Sales Tax 2001-02 to
2012-13
Name of the statue Forum where the Amount
dispute is pending Rs.in crore
The Central Excise Act,
1944 CESTAT/High Court 50.45
Finance Act, 1994 Commissioner 25.09
State Sales Tax Acts State Sales Tax Tribunal/ 5.46
Joint Commissioner
10. The Company does not have accumulated losses at the end of the
financial year and has not incurred cash losses in the financial year
under report or in the immediately preceding financial year.
11. According to the information and explanations given to us and
based on our audit procedures, the Company has not defaulted in
repayment of dues to any financial institution or bank.
12. According to the information and explanations given to us, the
Company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities.
13. In our opinion, the Company is not a chit fund or a nidhi mutual
benefit fund/society. Therefore, the provisions of clause 4(xiii) of
the Order are not applicable to the Company.
14. In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in shares,
securities, debentures or other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the
Company.
15. According to the information and explanations given to us and the
representations made by the Management, the Company has not given any
guarantee for loans taken by others from banks or financial
institutions.
16. The Company has not availed of any term loans. Accordingly, the
provisions of clause 4(xvi) of the Order are not applicable to the
Company.
17. According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that no funds raised on short term basis have been used for long term
investment.
18. The Company has not made preferential allotment of shares during
the year to parties and companies covered in the Register maintained
under section 301 of the Act.
19. The Company has not issued any debentures during the year.
20. The Company has not raised any money through public issue of
securities during the year.
21. During the course of our examination of the books of account and
records of the Company and according to the information and
explanations given to us, no material fraud on or by the Company has
been noticed or reported by the Company during the year.
For V. Sankar Aiyar & Co., For R.G.N. Price & Co.,
Chartered Accountants Chartered Accountants
Firm Reg. No. 109208W Firm Reg. No. 002785S
V. Mohan R. Rangarajan
Partner Partner
Membership No. 17748 Membership No. 41883
Mumbai, 29thMay 2014 Mumbai, 29th May 2014
Mar 31, 2013
Report on the Financial Statements
1. We have audited the accompanying financial statements of Cipla
Limited ("the Company"), which comprises the Balance Sheet as at 31st
March 2013, and the Statement of Profit and Loss and the Cash Flow
Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
2. 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 principles generally accepted in
India including Accounting Standards referred to in sub-section (3C) of
section 211 of the Companies Act, 1956 ("the Act"). This responsibility
includes the design, implementation and maintenance of internal control
relevant to the preparation and presentation of the financial
statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
Auditor''s Responsibility
3. Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
4. 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 judgement, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
Company''s preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting
estimates made by the Management, as well as evaluating the overall
presentation of the financial statements.
5. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
6. In our opinion and to the best of our information and according to
the explanations given to us, the financial statements give the
information required by the Act in the manner so required and give a
true and fair view in conformity with the accounting principles
generally accepted in India:
i. in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 2013;
ii. in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
iii. in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Report on Other Legal and Regulatory Requirements
7. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act and on the basis of such
checks of the books and records of the Company as we considered
appropriate and according to the information and explanations given to
us, we give in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the Order.
8. As required by sub-section (3) of section 227 of the Act, we report
that:
a. we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
b. in our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;
c. the Balance Sheet, 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
referred to in sub-section (3C) of section 211 of the Act;
e. on the basis of written representations received from the directors
as on 31st March 2013 and taken on record by the Board of Directors,
none of the directors is disqualified as on 31st March 2013, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Act.
(Referred to in paragraph 7 under the heading of "Report on Other Legal
and Regulatory Requirements" of our report of even date to the Members
of Cipla Limited)
1. a. The Company has generally maintained proper records showing full
particulars including quantitative details and situation of fixed
assets, other than situation of furniture and fixtures and office
equipment where the situation recorded is the location of the Company''s
different establishments.
b. The Company has a policy of physically verifying its fixed assets
periodically, which in our opinion, is reasonable having regard to the
size of the Company and the nature of its business. During the year,
some of the fixed assets have been physically verified by the
Management and discrepancies noticed during the physical verification
have been appropriately dealt with in the books of account.
c. The fixed assets that have been sold/disposed of during the year do
not constitute a substantial part of the total fixed assets of the
Company. Hence, the going concern concept has not been affected.
2. a. The inventory has been physically verified by the Management at
reasonable intervals during the year. The verification was done on the
basis of the perpetual inventory system operated by the Company. In
case of materials lying with third parties, certificates confirming
such inventory have been obtained by the Company from most of the third
parties.
b. In our opinion and on the basis of the information and explanations
given to us, the procedures for physical verification of inventory
followed by the Management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
c. On the basis of our examination of the inventory records, in our
opinion, the Company has maintained proper records of inventory. The
discrepancies noticed on physical verification of inventory, as
compared with the book records, were not material and have been
properly dealt with in the books of account.
3. As informed to us, the Company has not granted or taken any loans,
secured or unsecured, to or from companies, firms or other parties
listed in the Register maintained under section 301 of the Act.
Consequently, the requirements of clause (iii) of paragraph 4 of the
Order are not applicable to the Company.
4. In our opinion and according to the information and explanations
given to us, there are generally adequate internal control systems
commensurate with the size of the Company and the nature of its
business for purchase of inventory and fixed assets and for the sale of
goods and services. Further, on the basis of our examination of the
books and records of the Company and according to the information and
explanations given to us during the course of audit, no major weakness
has been noticed in these internal control systems.
5. a. In our opinion and according to the information and explanations
given to us, the particulars of contracts or arrangements referred to
in section 301 of the Act have been entered in the Register required to
be maintained under that section.
b. In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
agreements referred to in 5.a. above and exceeding the value of rupees
five lakh in respect of any party during the year have been made at
prices which are reasonable having regard to the prevailing market
prices at the relevant time.
6. In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposits from the public
within the meaning of section 58A, 58AA or any other relevant
provisions of the Act and Companies (Acceptance of Deposits) Rules,
1975.
7. In our opinion, the Company has an internal audit system
commensurate with its size and the nature of its business.
8. 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 Act in
respect of its products and are of the opinion that, prima facie, the
prescribed accounts and records have been made and maintained. However,
we have not carried out a detailed examination of the accounts and
records with a view to determine whether these are accurate or
complete.
9. a. According to the information and explanations provided to us and
the records of the Company examined by us, in our opinion, the Company
was 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. There were no undisputed arrears that
were outstanding as at 31st March 2013 for a period of more than six
months from the date they became payable.
b. According to the information and explanations given to us and based
on the records of the Company examined by us, as on 31st March 2013,
there were no dues in respect of Wealth Tax, Income Tax and Customs
Duty that have not been deposited with the appropriate authorities on
account of dispute.
The particulars of dues towards Excise Duty, Service Tax and Sales Tax
that have not been deposited on account of dispute as at 31st March
2013 and the forum where these disputes are pending are as follows:
Name of the
statute Nature of dues Financial
years to Forum where the Amount
which the
matter dispute is pending Rs. in
crore
pertains
The Central
Excise Act, Excise Duty 2000-01 to CESTAT/High Court 24.52
1944 2009-10
Finance
Act, 1994 Service Tax 2003-04 to Commissioner 5.33
2004-05
State Sales
Tax Acts Sales Tax 2001-02 to State Sales Tax
Tribunal/ 3.99
2010-11 Joint Commissioner
10. The Company does not have accumulated losses at the end of the
financial year and has not incurred cash losses in the financial year
under report or in the immediately preceding financial year.
11. According to the information and explanations given to us and
based on our audit procedures, the Company has not defaulted in
repayment of dues to any financial institution or bank.
12. According to the information and explanations given to us, the
Company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities.
13. In our opinion, the Company is not a chit fund or a nidhi/mutual
benefit fund/society. Therefore, the provisions of clause 4(xiii) of
the Order are not applicable to the Company.
14. In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in shares,
securities, debentures or other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the
Company.
15. According to the information and explanations given to us and the
representations made by the Management, the Company has not given any
guarantee for loans taken by others from banks or financial
institutions.
16. The Company has not availed of any term loans. Accordingly, the
provisions of clause 4(xvi) of the Order are not applicable to the
Company.
17. According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that no funds raised on short term basis have been used for long term
investment.
18. The Company has not made preferential allotment of shares during
the year to parties and companies covered in the Register maintained
under section 301 of the Act.
19. The Company has not issued any debentures during the year.
20. The Company has not raised any money through public issue of
securities during the year.
21. During the course of our examination of the books of account and
records of the Company and according to the information and
explanations given to us, no material fraud on or by the Company has
been noticed or reported by the Company during the year.
For V. Sankar Aiyar & Co., For R.G.N. Price & Co.,
Chartered Accountants Chartered Accountants
Firm Reg. No. 109208W Firm Reg. No. 002785S
V. Mohan R. Rangarajan
Partner Partner
Membership No. 17748 Membership No. 41883
Mumbai, 29th May 2013 Mumbai, 29th May 2013
Mar 31, 2012
1. We have audited the attached Balance Sheet of Cipla 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
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. These 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 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 (Auditors' Report) Order, 2003,
(hereinafter referred to as "the Order"), as amended, issued by the
Central Government of India in terms of section 227(4A) of the
Companies Act, 1956 (the Act) and on the basis of such checks of the
books and records of the Company as we considered appropriate and
according to the information and explanations given to us, we enclose
in the Annexure, a statement on the matters specified in paragraphs 4
and 5 of the said Order.
4. Without qualifying, attention is drawn to Note 36 appearing in the
attached financial statements regarding non- provisioning for potential
financial liability towards damages payable by the Company since such
liability cannot be reliably estimated as on date.
5. Further to our comments in the Annexure referred to in paragraph 3
above, 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 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 dealt with by this report comply with the
Accounting Standards referred to in section 211(3C) of the Companies
Act, 1956;
e. On the basis of the written representations received from the
Directors of the Company as on 31st March 2012 and taken on record by
the Board of Directors of the Company, 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;
f. In our opinion and to the best of our information and according to
the explanations given to us, the said financial statements, together
with the notes thereto, 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:
i. In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 2012;
ii. In the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
iii. In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
(Referred to in paragraph 3 of our report of even date to the Members
of Cipla Limited (the Company) for the year ended 31st March 2012)
1. a. The Company has generally maintained proper records showing full
particulars including quantitative details and situation of fixed
assets, other than situation of furniture and fixtures and office
equipment where the situation recorded is the location of the Company's
different establishments.
b. The Company has a policy of physically verifying its fixed assets
periodically, which in our opinion, is reasonable having regard to the
size of the Company and the nature of its business. During the year,
some of the fixed assets have been physically verified by the
Management and discrepancies noticed during the physical verification
have been appropriately dealt with in the books of account.
c. The fixed assets that have been sold/disposed of during the year do
not constitute a substantial part of the total fixed assets of the
Company. Hence, the going concern concept has not been affected.
2. a. The inventory has been physically verified by the Management at
reasonable intervals during the year. The verification was done on the
basis of the perpetual inventory system operated by the Company. In
case of materials lying with third parties, certificates confirming
such inventory have been obtained by the Company from most of the third
parties.
b. In our opinion and on the basis of the information and explanations
given to us, the procedures for physical verification of inventory
followed by the Management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
c. On the basis of our examination of the inventory records, in our
opinion, the Company has maintained proper records of inventory. The
discrepancies noticed on physical verification of inventory have been
properly dealt with in the books of account.
3. As informed to us, the Company has not granted or 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. Consequently, the requirements of clause (iii) of paragraph 4
of the Order are not applicable to the Company.
4. In our opinion and according to the information and explanations
given to us, there are generally adequate internal control systems
commensurate with the size of the Company and the nature of its
business for purchase of inventory and fixed assets and for the sale of
goods and services. Further, on the basis of our examination of the
books and records of the Company and according to the information and
explanations given to us during the course of audit, no major weakness
has been noticed in these internal control systems.
5. a. In our opinion and according to the information and explanations
given to us, the particulars of contracts or arrangements referred to
in section 301 of the Companies Act, 1956 have been entered in the
Register required to be maintained under that section.
b. In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
agreements referred to in 5.a. above and exceeding the value of rupees
five lakhs in respect of any party during the year have been made at
prices which are reasonable having regard to the prevailing market
prices at the relevant time.
6. In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposits from the public
within the meaning of section 58A, 58AA or any other relevant
provisions of Companies Act, 1956 and the Companies (Acceptance of
Deposits) Rules, 1975.
7. In our opinion, the Company has an internal audit system
commensurate with its size and the nature of its business.
8. 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 its products and are of the opinion that, prima
facie, the prescribed accounts and records have been made and
maintained. However, we have not carried out a detailed examination of
the accounts and records with a view to determine whether these are
accurate or complete.
9. a. According to the information and explanations provided to us and
the records of the Company examined by us, in our opinion, the Company
was 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, Cess and other material statutory dues applicable to
it with the appropriate authorities. There were no undisputed arrears
that were outstanding as at 31st March 2012 for a period of more than
six months from the date they became payable.
b. According to the information and explanations given to us and based
on the records of the Company examined by us, as on 31st March 2012,
there were no dues in respect of Wealth Tax, Service Tax, Customs Duty
and Cess that have not been deposited with the appropriate authorities
on account of dispute.
The particulars of dues towards Excise Duty, Sales Tax and Income Tax
that have not been deposited on account of dispute as at 31st March
2012 and the forum where these disputes are pending are as follows:
Name of the
statute Nature of
dues Financial
years to Forum
where the Amount
which the
matter dispute is
pending Rs.in
crore
pertains
The Central
Excise Act, Excise Duty 2002-03 to CESTAT/
Commissioner 24.22
1944 2009-10 (Appeals)
State Sales
Tax Acts Sales Tax 2001-02 to State Sales
Tax Tribunal 3.64
2008-09
Income Tax
Act, 1961 Income Tax 2009-10 Commissioner
of Income 17.83
Tax (Appeals)
10. The Company does not have accumulated losses at the end of the
financial year and has not incurred cash losses in the financial year
under report or in the immediately preceding financial year.
11. According to the information and explanations given to us and
based on our audit procedures, the Company has not defaulted in
repayment of dues to any financial institution or bank.
12. According to the information and explanations given to us, the
Company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities.
13. In our opinion, the Company is not a chit fund or a nidhi mutual
benefit fund/society. Therefore, the provisions of clause 4(xiii) of
the Order are not applicable to the Company.
14. In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in shares,
securities, debentures or other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the
Company.
15. According to the information and explanations given to us and the
representations made by the Management, the Company has not given any
guarantee for loans taken by others from banks or financial
institutions.
16. The Company has not obtained any term loans. Accordingly, the
provisions of clause 4(xvi) of the Order are not applicable to the
Company.
17. According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that no funds raised on short term basis have been used for long term
investment.
18. The Company has not made preferential allotment of shares during
the year to parties and companies covered in the Register maintained
under section 301 of the Companies Act, 1956.
19. The Company has not issued any debentures during the year.
20. The Company has not raised any money through public issue of
securities during the year.
21. During the course of our examination of the books of account and
records of the Company, and according to the information and
explanations given to us, no material fraud on or by the Company has
been noticed or reported by the Company during the year.
For V. Sankar Aiyar & Co., For R.G.N. Price & Co.,
Chartered Accountants Chartered Accountants
Firm Reg. No. 109208W Firm Reg. No. 002785S
V. Mohan R. Rangarajan
Partner Partner
Membership No. 17748 Membership No. 41883
Mumbai, 7th June 2012 Mumbai, 7th June 2012
Mar 31, 2010
1. We have audited the attached Balance Sheet of Cipla Limited as at
31st March 2010 and also 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 ouraudit.
2. We have conducted our audit in accordance with the auditing
standards generaUy accepted in India.These 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 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 (Auditors Report) Order, 2003, as
amended by the Companies (Auditors Report) (Amendment) Order, 2004
(hereinafter referred to as"the Order") issued by the Central
Government of India in terms of section 227(4A) of the Companies Act,
1956, and on the basis of such checks of the books and records of the
Company as we considered appropriate and according to the information
and explanations given to us, we 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 paragraph 3
above, 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 appears from our examination of
those books;
c. The Balance Sheet, the Profit and Loss Account and theCash Flow
Statement dealt with by this report are in agreement with the books of
account;
d. In our opinion, the Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in section 211 (3C) of the Companies
Act, 1956;
e. On the basis of the written representations received from the
Directors of the Company as on 31st March 2010 and taken on record by
the Board of Directors of theCompany, we report that none of the
Directors is disqualified as on 31st March 2010, from being appointed
as a Director in terms of section 274(1 )(g) of the Companies Act,
1956; and
f. In our opinion and to the best of our information and according to
the explanations given to us, the said financial statements, together
with the notes thereto, 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:
i. In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 2010;
ii. In the case of the Profit and Loss Account, of the profit for the
year ended on that date; and
iii. In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our
report of even date)
1. a. The Company has generally maintained proper records showing
full particulars including quantitative details and situation of fixed
assets, other than the situation of furniture and fixtures and office
equipment where the situation recorded is the location of the Companys
different establishments.
b. The Company has a policy of physically verifying its fixed assets
periodically, which in our opinion is reasonable having regard to the
size of the Company and the nature of its business. During the year,
some of the fixed assets have been physically verified by the
management and discrepancies noticed during the physical verification
and the assets scrapped during theyear has been properly dealt with in
the books of account.
c. The fixed assets that have been sold/disposed of during the year do
not constitute a substantial part of the total fixed assets of the
Company. Hence, the going concern concept has not been affected.
2. a. The inventory has been physically verified by the management at
reasonable intervals during theyear.
The verification was done on the basis of the perpetual inventory
system operated by the Company. In case of materials lying with third
parties, certificates confirming such inventory have been obtained by
the Company from most of the third parties.
b. In our opinion and on the basis of the information and explanations
given to us, the procedures for physical verification of in ventory
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
c. On the basis of our examination of the inventory records, in our
opinion, the Company has maintained proper records of inventory.The
discrepancies noticed on physical verification of inventory as compared
to the book records were not material and have been properly dealt with
in the books of account.
3. a. As informed to us, the Company has granted unsecured loan to
one company listed in the Register maintained under section 301 of the
Companies Act, 1956 having maximum balance of Rs.69.21 crore during the
year and closing balance of Rs.69.21 crore as on 31st March 2010.
b. Based on the information and explanations provided to us, the rate
of interest and other terms and conditions of the aforesaid unsecured
loan is prima facie not prejudicial to the interest of the Company.
c. Based on the information and explanations provided to us, since the
said loan is repayable on demand, principal has been regularly repaid
as and when demanded. Receipt of interest has also been regular during
the year.
d. There is no overdue amount in excess of Rs.1 lakh in respect of
loans granted to companies, firms or other parties listed in the
Register maintained under section 301 of the Companies Act, 1956.
e. During theyear,the Company has not taken any loans from parties
covered in the Register maintained under section 301 of the Companies
Act, 1956. During the year, the Company has repaid loans taken from
three parties covered in the Register maintained under section 301 of
the Companies Act, 1956 which has a maximum balance of Rs.72.68 crore.
f. In our opinion, the rate of interest and other terms and conditions
on which the loans referred in point 3.e.above have been taken are not,
prima facie, prejudicial to the interest of the Company.
g. The loans along with interest have been repaid during the year.
Until the time of repayment, payment of interest and principal, if any,
has been regular.
4. In our opinion and according to the information and explanations
given to us, there is generally adequate internal control system
commensurate with the size of the Company and the nature of its
business for purchase of inventory and fixed assets and for the sale of
goods and services. Further, on the basis of our examination of the
books and records of the Company, and according to the information and
explanations given to us during the course of audit, no major weakness
has been noticed in these internal control systems.
5. a. In our opinion and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in section 301 of the Companies Act, 1956 have been entered
in the Register required to be maintained underthat section.
b. In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
agreements and exceeding the value of rupees five lakhs in respect of
any party during the year have been made at prices, which are
reasonable having regard to the prevailing market prices at the
relevant time.
6. The Company has repaid all deposits accepted from public and has
not accepted any fresh deposits during the year under section 58A of
the Companies Act, 1956. In our opinion and according to the
information and explanations given to us, the Company has comnied with
the provisions of section 58A and other relevant provisions of the
Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,
1975 with regard to the deposits repaid.
7. In our opinion, the Company has an internal audit system
comminsuiv: te with its size and the nature of its business.
8. 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 and are of the opinion that, prima facie, the prescribed
accounts and records have been made and maintained.We have not,
however, made a detailed examination of the accounts and records with a
view to determine whether they are accurate or complete.
9. a. According to the information and explanations provided to us
and the records of the Company examined by us, in our opinion, the
Company was regular in depositing undisputed Provident Fund, Investor
Education and Protection Fund,EmployeesState Insurance, IncomeTax,
Sales Tax, Wealth Tax,Service Tax, Customs Duty, Excise Duty, Cess and
other material statutory dues applicable to it. There were no
undisputed dues that were outstanding as at 31$t March 2010 for a
period of. more than six months from the date they became payable.
b. According to the information and explanations given to us and based
on the records of the Company examined by us,ason 31$t March 2010,
there were no dues in respect of IncomeTax, Wealth Tax, Service Tax,
Customs Duty and Cess that have not been deposited with the appropriate
authorities on account of dispute.
The particulars of dues towards Excise Duty and Sales Tax that have not
been deposited on account of dispute as at 31st March 2010 and the
forum where these disputes are pending are as follows:
Name of the Nature of dues Years to which Forum where the Amount
statute the matter dispute is
pending Rs. in crore
pertains
The Central Excise Duty 2000 to 2010 CESTAT/ 47.80
Excise Act, 1944 Commissioner
Tribunal
State Sales
Tax Sales Tax 2001 to 2010 CESTAT/ 0.86
Commissioner
Tribunal
10. The Company does not have accumulated losses at the end of the
financial year and has not incurred cash losses in the current year or
in the immediately preceding financial year.
11. According to the information and explanations given to us and
based on our observations during the audit, the Company has not
defaulted in repayment of dues to any financialinstitution or bank.
12. According to the information and explanations given to us, the
Company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities.
13. In our opinion, the Company is not a chit fund or a nidhi mutual
benefit fund/society.Therefore, the provisions of clause 4(Xiii) of the
Order are not applicable to the Company.
14. In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in shares,
securities, debentures or other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the
Company.
15. According to the information and explanations given to us and the
representations made by the management, theCompany has not given any
guarantee for loans taken by others from banks orfinancial
institutions.
16. TheCompany has not obtained any term loans. Accordingly, the
provisions of clause 4(xvi) of theOrder are not applicable to the
Company.
17. According to the information and explanations given to us and on
an overall examination of the Balance Sheet of theCompany, we report
that no funds raised on short term basis have been used for long term
investment.
18. The Company has not made preferential allotment of shares to
parties and companies covered in the Register maintained under section
301 of the Companies Act, 1956.
19. The Company has not issued any debentures.
20. TheCompany has not raised any money through a public issue of
securities during the year and therefore verification of the end use of
money does not arise. However, during the year the Company has allotted
2,56,30,000 equity shares of Rs.2 each under Qualified Institutions
Placement (Refer Note 26 of Schedule S on Significant Accounting
Policies and Notes to the Accounts).
21. During the course of our examination of the books of accountand
records oftheCompany,and according to the information and explanations
given to us, no fraud on or by the Company has been noticed or reported
by the Company during the year.
For V. Sankar Aiyar & Co., For R.G.N. Price & Co.,
Chartered Accountants Chartered Accountants
Firm Reg. No. 109208W Firm Reg. No. 002785S
V. Mohan R. Rangarajan
Partner Partner
Membership No. 17748 Membership No. 41883
Mumbai, 15th June 2010 Mumbai, 15th June 2010