TO THE MEMBERS OF M/s PHAARMASIA LIMITED HYDERABAD
Report on the IND AS Financial Statements
1. We have audited the accompanying financial statements of Phaarmasia Limited("the Company") which comprise the balance sheet as at 31st March 2019 thestatement of Profit and Loss(including Other Comprehensive Income) statement of changesin equity and statement of cash flows for the year ended on that date and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information
2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by CompaniesAct 2013 ("the Act") in the manner so required and give a true and fair view inconformity with the Indian Accounting Standards prescribed under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended ("IndAS") and Other accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2019 and the profit and Total ComprehensiveIncome changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia(ICAI) together with the independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Companies Act 2013 and the Rulesthere under and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe financial statements.
Key Audit Matters
4. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
"We have determined that there are no key audit matters to communicate in ourreport."
Management's Responsibility for the Standalone Financial Statements
5. The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 with respect to the preparation of these financialstatements that give a true and fair view of the financial position and financialperformance including other Comprehensive Income statement of changes in equity andcash flows of the Company in accordance with the accounting principles generally acceptedin India including the accounting Standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateimplementation and maintenance of accounting policies; making judgments and estimates thatare reasonable and prudent; and design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Ind AS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
6. In preparing the Ind AS financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
7. The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
8. Our objectives are to obtain reasonable assurance about whether the Ind AS financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these Ind AS financial statements.
9. 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 Ind AS financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
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 Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness 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 conditions that 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 Ind AS 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 Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
10. Materiality is the magnitude of misstatements in the Ind AS financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
11. We also communicate with those charged with governance regarding among othermatters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
12. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
13. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
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 ofthe Act we give in the Annexure-A a statement on the matters Specified in paragraphs 3and 4 of the Order.
14. As required by Section 143(3) of the Act based on our audit we report that:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c. The Balance Sheet the Statement of Profit and Loss including Other
Comprehensive Income Statement of Changes in Equity and the Statement of Cash Flowdealt with by this Report are in agreement with the relevant books of account.
d. In our opinion the aforesaid Ind AS financial statements comply with the Ind ASspecified 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 March312019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct.
f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
g. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations as on
31.03.2019 on its financial position in its Ind AS financial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts ; The Companyhas neither entered any derivative contract during the year under audit and nor have anyoutstanding derivative contract at the end of the year ;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
15. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
For Sathuluri & Co.
Firm Regn No: 006383S
Place : Hyderabad
Date : 30-05-2019
ANNEXURE-A TO INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
(i) In respect of its Fixed Assets:
a. The company has maintained proper records showing full particulars includingquantitative details and situations of Fixed Assets.
b. As per the information and explanation given to us the Fixed Assets of the companyhave been physically verified by the management according to the phased programme whichis designed to cover all the Fixed Assets at reasonable intervals and the said programmeis considered reasonable and no material discrepancies were noticed on such verification.
c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the company. The Company has taken 1233.14 Square Meters of land onlease for its unit II from Divya Lakshmi Engineering for a period of 80 years .
(ii) In respect of its Inventories:
a. As explained to us inventories have been physically verified by the management atregular intervals during the year.
b. In our opinion and according to the information and explanation given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the company and the nature of itsbusiness.
c. The company has maintained proper records of inventories. As explained to us therewere no material discrepancies noticed on physical verification of inventory as comparedto the book records.
(iii) According to the information and explanation 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;
(iv) According to information given to us the company has not given any loans has notdone any investment not given any guarantees and provided securities which are coveredu/s 185 and 186 of the companies Act 2013. Hence this clause is not applicable.
According to the information and explanation given to us the company has not accepteddeposits within the meaning of the provisions of sections 73 to 76 of the Companies Actand the rules framed there under; therefore the provisions of this clause is notapplicable to the Company;
(v) As informed to us maintenance of cost records has not been specified by theCentral Government under sub-section (1) of section 148 of the Companies Act.
(vi) (a) The company is regular in depositing undisputed statutory dues includingprovident fund employees' state insurance income-tax sales-tax wealth tax servicetax duty of customs duty of excise value added tax Goods and Service Tax (GST) cessand any other statutory dues with the appropriate authorities.
(b) According to the information and explanation given to us there are no dues payableon account of income tax or sales tax or wealth tax or service tax or duty of customs orduty of excise or value added tax Goods and Service Tax (GST) or cess pertaining to anydispute with the relevant authorities other than those mentioned in the notes to accounts.
(vii) According to the information and explanation given to us the Company has notdefaulted in repayment of dues to any financial institution or bank Government or dues todebenture holders.
(viii) According to the information and explanation to us the company has no moneysraised by way of public offers (including debt instruments) no has the company taken anyterm loan.
(ix) Based on the audit procedures applied and according to the information andexplanation given to us we report that no fraud on or by the company has been noticed orreported during the year under audit.
(x) The Managerial Remuneration is paid or provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct.
(xi) The company is not a Nidhi Company.
(xii) According to information given to us all transactions with the related partiesare in compliance with sections 177 and 188 of Companies Act 2013 where applicable andthe details have been disclosed in the Financial Statements etc. as required by theapplicable accounting standards;
(xiii) The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.
(xiv) The company has not entered into any non-cash transactions with directors orpersons connected with them.
(xv) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For Sathuluri & Co.
Firm Regn No: 006383S
Place : Hyderabad
Date : 30-05-2019
Annexure - B to INDEPENDENT AUDITOR'S REPORT even date on the Financial Statements ofPHAARMASIA LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of M/sPHAARMASIA LIMITED Limited ("the Company") as on 31 March 2019 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For Sathuluri & Co.
Firm Regn No: 006383S
Place : Hyderabad
Date : 30-05-2019