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Lupin Ltd.

BSE: 500257 Sector: Health care
NSE: LUPIN ISIN Code: INE326A01037
BSE 00:00 | 24 Apr 2020 Lupin Ltd
NSE 05:30 | 01 Jan 1970 Lupin Ltd

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OPEN 825.00
PREVIOUS CLOSE 821.90
VOLUME 448909
52-Week high 890.25
52-Week low 505.00
P/E 23.31
Mkt Cap.(Rs cr) 39,744
Buy Price 877.25
Buy Qty 5055.00
Sell Price 884.00
Sell Qty 23.00
OPEN 825.00
CLOSE 821.90
VOLUME 448909
52-Week high 890.25
52-Week low 505.00
P/E 23.31
Mkt Cap.(Rs cr) 39,744
Buy Price 877.25
Buy Qty 5055.00
Sell Price 884.00
Sell Qty 23.00

Lupin Ltd. (LUPIN) - Auditors Report


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Company auditors report

To the Members of LUPIN Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the standalone financial statements of Lupin Limited ("theCompany") which comprise the standalone balance sheet as at 31 March 2019 and thestandalone statement of profit and loss (including other comprehensive income) thestandalone statement of changes in equity and the standalone statement of cash flows forthe year then ended and notes to the standalone financial statements including a summaryof significant accounting policies and other explanatory information (hereinafter referredto "the standalone financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (the "Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at 31 March 2019 and profit and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance 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 financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

Key audit matter description How the matter was addressed in audit
1. Revenue Recognition: Refer note 1B(k) of accounting policy and note 39 in standalone financial statements. Our audit procedures in respect of the recognition of revenue included the following:
The Company recognises revenue from the sales of pharmaceutical products when control over goods is transferred to a customer. The actual point in time when revenue is recognised varies depending on the specific terms and conditions of the sales contracts entered into with customers. - Assessing the appropriateness of the policies in respect of revenue recognition by comparing with applicable accounting standards;
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 right of return and price adjustments. We identified the recognition of revenue from sale of products as a key audit matter because • Revenue is a key performance indicator of the Company and there is risk of revenue being overstated due to fraud resulting from pressure to achieve targets earning expectations or incentive schemes linked to performance for a reporting period. • Establishing an appropriate accrual towards rebate discount returns and allowances requires significant estimation on the part of management and change in this estimates can have a significant financial impact. - Evaluating the design testing the implementation and operating effectiveness of the Company's internal controls including general IT controls and key IT application controls over recognition of revenue and measurement of rebates discounts returns;
- Performing substantive testing (including year-end cutoff testing) by selecting samples of revenue transactions recorded during and after the year and verifying the underlying documents which included sales invoices/ contracts and dispatch/shipping documents. Obtaining and assessing appropriateness of positions for returns and rebates. Performing retrospective review to identify any management bias;
- Reviewing the terms of the research and development/ licensing arrangements to determine whether the rights transferred under the contract qualified for revenue recognition having regard to the remaining performance obligations under the Contract and assessing whether appropriate proportion of revenue is deferred in respect of ongoing performance obligations. Testing controls over review of contracts and revenue recognition;
The Company routinely enters into development and commercialization arrangements relating to research and development of new products in the pharmaceutical sector including collaboration with other pharmaceutical companies. This includes in-licensing and out-licensing arrangements and other types of complex agreements. The nature of these arrangements are often inherently complex and unusual requiring management judgment to be applied in respect of revenue recognition. Considering the extent of estimation and judgment involved recognition of revenue from such contracts has also been considered as key audit matter. - Assessing manual journals posted to revenue to identify unusual items not already covered by our audit testing;
- Evaluating the adequacy of the standalone financial statement disclosures including disclosures of key assumptions judgments and sensitivities; and
- Evaluating adequacy of disclosures given in Note 39 to standalone financial statements.
2. Investment in Subsidiaries and Joint Venture: The carrying value of investment in subsidiaries and a joint venture (JV) as at 31 March 2019 is ' 51247.3 millions. These investments are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If such evidence exists impairment loss is determined and recognised in accordance with note 1B(h) of accounting policies to the standalone financial statements. We identified the assessment of impairment indicators and resultant provision if any in respect of investment in subsidiaries/joint venture as a key audit matter because of. • The significance of the amount of these investments in the Standalone Balance Sheet. Our audit procedures in respect of impairment of investment in subsidiaries and JV included the following:
- Testing design implementation and operating effectiveness of key controls over the impairment review process including the review and approval of forecasts and review of valuation models;
- Assessing the valuation methodology used by management and management review control is around making the assessment and testing the mathematical accuracy of the impairment models;
- Evaluating the reasonableness of the valuation assumptions such as discount rates used by management through reference to external market data;
• Performance and net worth of these entities and • The degree of management judgement involved in determining the recoverable amount of these investments including: - Challenging the appropriateness of the business assumptions used by management such as sales growth cost and the probability of success of new products;
- Evaluating past performances where relevant and assessed historical accuracy of the forecast produced by management;
- Valuation assumptions such as discount rates. - Business assumptions used by management such as sales growth and costs and the resultant cash flows projected to be generated from these investments. - Enquiring and challenging management on the commercial strategy associated with the products to ensure that it was consistent with the assumptions used in estimating future cash flows;
- Considering whether events or transactions that occurred after the balance sheet date but before the reporting date affect the conclusions reached and the associated disclosures; and
- Performing sensitivity analysis of key assumptions including future revenue growth rates costs and the discount rates applied in the valuation models.
3. Intangible Assets:
The carrying value of Intangible Assets including IP R&D aggregate to र 6010.2 million as at 31 March 2019. These assets are evaluated for any indicators of impairment annually. Refer note no. 1B(f) of accounting policies in respect of impairment. We assessed the appropriateness of the carrying value of the intangible assets by performing the following audit procedures:
- Testing design implementation and operating effectiveness of key controls over the impairment review process including the review and approval of forecasts and review of valuation models;
Management performs the annual assessment of the intangible assets including IP R&D at each cash generating unit (CGU) level to identify any indicators of impairment. The recoverable amount of the CGUs which is based on the higher of the value in use or fair value less costs to sell has been derived from discounted forecast cash flow models. These models use several key assumptions including estimates of future sales volumes prices operations costs terminal value growth rates the impact of the expiry of patents on the product and potential product obsolescence and the weighted average cost of capital (discount rate). - Assessing the valuation methodology used by management and management review control is around making the assessment and testing the mathematical accuracy of the impairment models;
- Assessing management's identification of CGUs with reference to the guidance in the applicable accounting standards;
- Evaluating the reasonableness of the valuation assumptions such as discount rates used by management through reference to external market data;
Considering the inherent uncertainty complexity and management judgment involved and the significance of the value of the assets impairment assessment of intangible assets has been considered as a key audit matter. - Challenging the appropriateness of the business assumptions used by management such as sales growth and the probability of success of new products;
- Evaluating past performances where relevant and assessed historical accuracy of the forecast produced by management;
- Enquiring and challenging management on the commercial strategy associated with the products to ensure that it was consistent with the assumptions used in estimating future cash flows;
- Considering whether events or transactions that occurred after the balance sheet date but before the reporting date affect the conclusions reached on the carrying values of the assets and associated disclosures; and
- Performing sensitivity analysis of key assumptions including future revenue growth rates costs and the discount rate applied in the valuation models.
4. Uncertain tax positions: (UTPs) With the support of tax specialists we assessed the appropriateness of the provisions for UTPs and carrying value of deferred tax assets by performing the following audit procedures;
The Company operates in numerous tax jurisdiction with various tax exemptions available across regions which are subject to periodic challenges by local tax authorities leading to protracted litigations. There are a number of open tax and transfer pricing matters under litigation with tax authorities over a number of years.
- Testing the design and operating effectiveness of the Company's controls over provisions for current tax deferred tax and uncertain tax positions;
The range of possible outcomes for provisions and contingencies can be wide and management is required to make certain judgement in respect of estimates of tax exposures and contingencies in order to assess the adequacy of tax provision. Provision for current tax valuation of UTPs and recognition of deferred assets/liabilities have been identified as a key audit matter due to the inherent level of complexity in the underlying tax laws and the extent of management judgement involved in developing these estimates. These matters are disclosed in note 46 to the standalone financial statements. Refer note 1B(i) in significant accounting policies. - Assessing and challenging the completeness of UTPs in conjunction with our internal tax specialists by considering changes to business and tax legislation in key jurisdictions by having discussions with management and review of correspondence with authorities where relevant; - Assessing and challenging the calculation for the current tax provision and the procedures performed to analyse movements including the rationale for any release increase or continued provision in the year;
Total tax related liabilities carried in the books aggregate to र 2662.2 million (Deferred tax liability) and र 66.1 million (Current tax liability). - Assessing and challenging management's judgements regarding the recoverability of temporary differences pertaining to deferred tax balances by obtaining and critically examining the forecasts and demonstrating the expected utilization of key temporary differences in order to assess their recoverability;
- Assessing and challenging management's judgments with respect to probability of outflow arising out of litigation after considering the status of recent tax assessments audits and enquiries recent judicial pronouncements and judgments in similar matters developments in the tax environment and outcome of past litigations. We focused our work on the jurisdictions with greatest potential exposure involving higher level of judgements;
- Involving transfer pricing specialists to review the transfer pricing methodology of the group and associated approach to provisioning; and
- Evaluating adequacy of disclosures given in Note 46 to standalone financial statements.

Other Information

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Management's Responsibility for the Standalone Financial Statements

The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign 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 companyhas adequate internal financial controls with reference to financial statements in placeand the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditionsthat may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of sub-section (11) of section 143 of the Act2013 we give in the "Annexure A" statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

(A) As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of change in equity and thestandalone cash flow statement dealt with by this Report are in agreement with the booksof account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of Section164 (2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31 March 2019 onits financial position in its standalone Financial statements

- Refer Note 36 to the standalone financial statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these financial statements since they do not pertain to thefinancial year ended 31 March 2019.

(C) With respect to the matter to be included in the Auditor's Report under section197(16):

In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under section 197(16) which arerequired to be commented upon by us.

Annexure A to the Independent Auditor's Report - 31 March 2019

(Referred to our report of even date)

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of the fixed assets.

(b) The Company has a regular program of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of three years. Inaccordance with this program a portion of the fixed assets has been physically verifiedby the management during the year and no material discrepancies have been noticed on suchverification. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given to us and based on theexamination of the registered sale deed / transfer deed / conveyance deed / sharecertificate / other documents evidencing title and provided to us we report that thetitle deeds of immovable properties of land and building which are freehold as disclosedin Note 2 to the standalone financial statements are held in the name of the Companyexcept for the following:

(र in million)
Particulars of the land and building Gross Block (As at 31.03.2019) Net Block (As at 31.03.2019) Remarks
Freehold land located in Maharashtra admeasuring 7 Hectare and 70.91 Acre 29.6 29.6 The title deeds are in the name of the erstwhile company that was amalgamated with the Company pursuant to the Scheme of amalgamation sanctioned by the Hon'ble Bombay High Court
Freehold building located in Maharashtra admeasuring 8038 sqft 133.9 91.3 The title deeds are in the name of erstwhile company that was amalgamated with the Company pursuant to the Scheme of amalgamation sanctioned by the Hon'ble Bombay High Court

In respect of immovable properties of land and buildings that have been taken on leaseand disclosed as fixed asset in Note

2 to the standalone Ind AS financial statements the lease agreements are in the nameof the Company where the Company is the lessee in the agreement except the following:

(र in million)
Particulars of the building Gross Block (As at 31.03.2019) Net Block (As at 31.03.2019) Remarks
Leasehold building located in Delhi admeasuring 1628 sqft 2.8 2.3 The title deeds are in the name of erstwhile company that was amalgamated with the Company pursuant to the Scheme of amalgamation sanctioned by the Hon'ble Bombay High Court

In respect of immovable properties of land and buildings which are disclosed as fixedasset in the standalone Ind AS financial statements the original documents for thefollowing assets are not available for verification.

(र in million)
Particulars of the land and building Gross Block Net Block
(As at 31.03.2019) (As at 31.03.2019)
Building located in Maharashtra 7.5 5.1
Land located in Uttarakhand 0.3 0.3

(ii) Inventories apart from goods in transit and inventories lying with third partieshave been physically verified by the Management during the year and the discrepanciesnoticed on such verification between the physical stock and book records were notmaterial. In our opinion the frequency of such verification is reasonable. Inventorieslying with third parties have been substantially confirmed by them as at the year-end andno material discrepancies were noticed in respect of such confirmations.

(iii) According to information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013 (‘the Act'). Accordingly paragraph 3(iii) of the Order is notapplicable to the Company.

(iv) According to the information and explanation given to us the Company has compliedwith the provisions of Section 185 and 186 of the Act in respect of the investments madeand guarantees provided as applicable. The Company has not granted any loans or providedany security to the parties covered under Section 185 and 186 of the Act.

(v) According to the information and explanations given to us the Company has notaccepted any deposits as per the directives issued by the Reserve Bank of India under theprovisions of Sections 73 to 76 or any other relevant provisions of the Act and the rulesframed there under. Accordingly paragraph 3(v) of the Order is not applicable to theCompany.

(vi) We have broadly reviewed the records maintained by the Company pursuant to therules prescribed by Central Government for maintenance of cost records under Section 148(1) of the Act and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. However we have not made a detailed examination ofthe records.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Employees' stateinsurance Income tax duty of Customs Goods and Service tax Cess and other materialstatutory dues have generally been regularly deposited during the year by the Company withthe appropriate authorities.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employees' state insurance Income tax duty ofCustoms Goods and Service tax Cess and other material statutory dues were in arrears asat 31 March 2019 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofIncome tax Sales Tax Value added tax Service tax duty of Customs duty of ExciseGoods and Service tax and Cess which have not been deposited with the appropriateauthorities on account of any dispute other than those mentioned in Annexure I to thisreport.

(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowings to banks or government.

The Company has not taken any loans or borrowings from financial institutions and hasnot issued any debentures during the year.

(ix) The Company has not raised any money by way of initial public offer furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3(ix) of the Order is not applicable to the Company.

(x) During the course of our examination of the books and records of the companycarried out in accordance with generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by the Company or on the Company by its officers or employees noticedor reported during the year nor have we been informed of any such cases by theManagement.

(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us the Company is not aNidhi company and the Nidhi Rules 2014 are not applicable to it. Accordingly paragraph3(xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with related parties are incompliance with the provisions of Sections 177 and 188 of the Act where applicable. Thedetails of such related party transactions have been disclosed in the standalone Ind ASfinancial statements as required under Indian Accounting Standard (Ind AS) 24 RelatedParty Disclosures specified under Section 133 of the Act read with the relevant rulesissued thereunder.

(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with its directors or persons connected with them. Accordingly paragraph3(xv) of the Order is not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly paragraph 3 (xvi) of the Order is not applicable to the Company.

Annexure - I to the Independent Auditor's Report - 31 March 2019

Amounts of dues of Income tax sales tax Value added tax Service tax duty ofCustoms duty of Excise Goods and Service tax which have not been deposited with theappropriate authorities on account of any dispute.

Name of the Statute Nature of Dues Forum where dispute is pending Period to which amount relates Amount demanded Amount unpaid
(Rs million) (Rs million)
Income tax Act 1961 Income tax Commissioner of Income tax (Appeals) 2004-2016 1818.5 1164.9
Central Excise Act 1944 Excise duty Debonding matters Customs Excise and Service Tax Appellate Tribunal (CESTAT) 2010 & 2012 371.1
Excise duty -Others Customs Excise and Service Tax Appellate Tribunal (CESTAT) Various 64.8 48.3
Excise duty -Others Commissioner Various 102.4 102.4
Excise duty -Others Joint Commissioner 2005-06 10.0 10.0
Excise duty -Others Additional Commissioner 2001-04 7.7 7.7
Excise duty -Others Assistant Commissioner 2004-05 2011 2017-18 14.5 14.5
Excise duty -Others High Court 2005 to 2007 12.9 12.9
Service Tax Matters Customs Excise and Service Tax Appellate Tribunal (CESTAT) 2005-08 55.1 55.1
Service Tax Matters Commissioner 2005-08 7.4 7.4
Service Tax Matters High Court 2005-06 22.2 22.2
Goods and Service tax Central and various States' Sales Tax Acts Goods and Service tax Sales tax Value added tax Sales Tax Tribunal 2000-01 2003-06 2009-11 32.4 26.7
and various States' Supreme Court 2000-01 0.5 0.5
Value Added Tax Acts High Court 2002-03 2004-05 11.6 5.3
Commissioner of Sales Tax (Appeal) 2002-03 2004-05 2005-09 2014-15 2018-19 8.5 7.8
Joint Commissioner 2001-04 2005-06 2013-14 2015-16 16.9 9.5
Deputy Commissioner 1994-95 2000-01 2012-14 7.0 7.0
Additional Commissioner 1994-95 2010-11 2012-13 2015-16 18.1 15.6
Commercial Tax Officer 2014-15 0.02 0.02
Assistant Commissioner 2003-04 0.3 -
The Customs Act 1962 Customs duty Customs Excise and Service Tax Appellate Tribunal (CESTAT) 2010-2011 0.8 0.8

Annexure B to the Independent Auditor's report on the standalone financial statementsof Lupin Limited for the year ended 31 March 2019

Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under section 143(3)(i) of the Companies Act 2013

(Referred to in paragraph 2(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference to financial statementsof Lupin Limited ("the Company") as oर 31 March 2019 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.

In our opinion the Company has in all material respects an adequate internalfinancial control system with reference to financial statements and such internalfinancial controls were operating effectively as at 31 March 2019 based on the internalfinancial controls with reference to financial statements criteria established by theCompany considering the essential components of internal controls stated in the GuidanceNote on Audit of Internal Financial Controls over Financial Reporting issued by theInstitute of Chartered Accountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note.

These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (hereinafterreferred to as "the Act").

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to financial statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm Registration No. 101248W/W - 100022
Venkataramanan Vishwanath
Place: Mumbai Partner
Date: May 15 2019 Membership No. 113156


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