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Sun Pharmaceuticals Industries Ltd.

BSE: 524715 Sector: Health care
NSE: SUNPHARMA ISIN Code: INE044A01036
BSE 15:52 | 27 Mar 2018 Sun Pharmaceuticals Industries Ltd
NSE 05:30 | 01 Jan 1970 Sun Pharmaceuticals Industries Ltd
OPEN 505.00
PREVIOUS CLOSE 503.50
VOLUME 367802
52-Week high 728.45
52-Week low 433.15
P/E 325.97
Mkt Cap.(Rs cr) 121,225
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 505.00
CLOSE 503.50
VOLUME 367802
52-Week high 728.45
52-Week low 433.15
P/E 325.97
Mkt Cap.(Rs cr) 121,225
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sun Pharmaceuticals Industries Ltd. (SUNPHARMA) - Auditors Report

Company auditors report

TO THE MEMBERS OF

SUN PHARMACEUTICAL INDUSTRIES LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of SUN PHARMACEUTICALINDUSTRIES LIMITED (hereinafter referred to as "the Company") which comprisethe Balance Sheet as at 31st March 2015 the Statement of Profit and Loss the Cash FlowStatement for the year then ended and a summary of the significant accounting policiesand other explanatory information in which are incorporated the financial information oferstwhile Ranbaxy Laboratories Limited now a division of the Company (hereinafterreferred to as "erstwhile Ranbaxy" or "amalgamating company") for theyear ended on that date consequent to its amalgamation into the Company which has beeneffected on 24th March 2015 with the appointed date of 1st April 2014 audited by otherauditors (division / component auditors) referred in the 'Other Matter' section below.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 (hereinafter referred to as "the Act") withrespect to the preparation of these standalone financial statements that give a true andfair view of the financial position financial performance and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act read together with our remarks in paragraph 2 of the 'Emphasisof Matter' section below. Those Standards require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether the standalonefinancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained and the audit evidence obtained bythe other auditors (division / component auditors) of the amalgamating company in terms oftheir report referred in the 'Other Matter' section below is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us and based on the consideration of the report of the other auditors (division/ component auditors) on the financial information of the amalgamating company referred inthe 'Other Matter' section below and read together with paragraphs 1 and 2 of the'Emphasis of Matter' section below the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2015 and its loss and its cash flows for theyear ended on that date.

Emphasis of Matter

1. We draw attention to Note 51 to the standalone financial statements. As referred toin the said Note the financial statements of the Company for the year ended 31st March2015 were earlier approved by the Board of Directors at their meeting held on 29th May2015 which were subject to revision by the Management of the Company so as to give effectto the Scheme of Arrangement for amalgamation of Sun Pharma Global Inc. a wholly ownedsubsidiary into the Company w.e.f 1st January 2015. Those financial statements wereaudited by us and our report dated 29th May 2015 addressed to the Members of theCompany expressed an unqualified opinion on those financial statements and included anEmphasis of Matter paragraph drawing attention to the foregoing matter. Consequent to theCompany obtaining the required approvals the aforesaid financial statements are revisedby the Company to give effect to the said Scheme of Arrangement.

2. Apart from the foregoing matter and the provision for proposed dividend theattached financial statements do not take into account any events subsequent to the dateon which the financial statements referred to in paragraph 1 above were earlier approvedby the Board of Directors and reported upon by us as aforesaid.

3. a) We draw attention to Note 55 to the standalone financial statements. As referredto in the said Note remuneration to the

Managing Director and the Whole-time Directors for the previous year ended 31st March2014 is in excess of the limits specified under Schedule XIII to the Companies Act 1956by 7 44.7 Million and commission of 7 6.4 Million for the previous year ended 31st March2014 to the Non-Executive Directors is in excess since there is absence of net profitsfor the previous year under section 309(4) read with section 309(5) of the Companies Act1956. In this regard the Company has made necessary applications to the CentralGovernment for the waiver of the excess remuneration and commission for the previous yearended 31st March 2014. The Company is awaiting Central Government approval in respect ofthe said applications.

b) We draw attention to Note 55 to the standalone financial statements. As referred toin the said Note remuneration to the Managing Director and the Whole-time Director forthe year is in excess of the limits specified under Schedule V to the Companies Act 2013by 7 20.7 Million. In this regard the Company has made necessary applications to theCentral Government for approving the amounts of maximum remuneration payable whichincludes the excess amounts already paid / provided. The Company is awaiting CentralGovernment approval in respect of the said applications.

Our opinion is not modified in respect of these matters.

Other Matter

The standalone financial statements include the financial information of erstwhileRanbaxy consequent to its amalgamation into the Company which has been effected on 24thMarch 2015 with the appointed date of 1st April 2014 (Refer Note 48 to the standalonefinancial statements). We did not audit the financial information of erstwhile Ranbaxyincluded in the standalone financial statements of the Company whose financialinformation reflect total assets of 7 88083.7 Million as at 31st March 2015 totalrevenue of 7 55867.3 Million and net cash outflow of 7 4674.2 Million for the year endedon that date as considered in the standalone financial statements. This financialinformation of erstwhile Ranbaxy has been audited by other auditors (division / componentauditors) whose report has been furnished to us and our opinion in so far as it relatesto the amounts and disclosures included in respect of erstwhile Ranbaxy and our report interms of sub-sections (3) and (11) of Section 143 of the Act insofar as it relates toerstwhile Ranbaxy is based solely on the report of such other auditors (division /component auditors).

Our opinion on the standalone financial statements and our report on the Other Legaland Regulatory Requirements below is not modified in respect of the above matter withrespect to our reliance on the work done and the report of the other auditors (division /component auditors).

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2015 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act based on ourcomments and in terms of the comments in the report of the other auditors (division /component auditors) in respect of the amalgamating Company referred in the 'Other Matter'section above we give in the Annexure a statement on the matters specified in paragraphs3 and 4 of the Order.

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

(a) We have sought and obtained all the information and explanations which to the 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 and the financialinformation adequate for the purpose of our audit have been received in respect of theamalgamating company audited by the other auditors (division / component auditors)referred in the 'Other Matter' section above.

(c) The report on the financial information of the amalgamating company audited by theother auditors (division / component auditors) referred in the 'Other Matter' sectionabove has been sent to us and has been properly dealt with by us in preparing this report.

(d) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account and the financialinformation in respect of the amalgamating company audited by the other auditors (division/ component auditors) referred in the 'Other Matter' section above.

(e) In our opinion and based on the consideration of the report of the other auditors(division / component auditors) on the financial information of the amalgamating companyreferred in the 'Other Matter' section above the aforesaid standalone financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014.

(f) On the basis of the written representations received from the directors as on 31stMarch 2015 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2015 from being appointed as a director in terms of Section164(2) of the Act.

(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 in our opinionand to the best of our information and according to the explanations given to us and interms of the report of the other auditors (division / component auditors) in respect ofthe amalgamating company referred in the 'Other Matter' section above:

i. The standalone financial statements disclose the impact of pending litigations onthe financial position of the company -Refer Notes 28(a) and 28(c) to the standalonefinancial 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 includingderivative contracts - Refer Note 6 and Note 10 to the standalone financial statements;

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

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm's Registration No. 117366W/W-100018)

RAJESH K. HIRANANDANI

Partner

(Membership No. 36920)

Place of Signature: Mumbai

Date: 29th May 2015 [11th August 2015 as to effect the matters discussed underparagraphs 1 and 2 of the 'Emphasis of Matter' section above]

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to In Paragraph 1 Under 'Report on Other Legal and Regulatory Requirements'Section of Our Report of Even Date)

Our reporting on the Order includes erstwhile Ranbaxy which has been audited by otherauditors (division / component auditors) referred in the 'Other Matter' section of ourreport of even date and our report in respect of the division (erstwhile Ranbaxy) is basedsolely on the report of the other auditors (division / component auditors) to the extentconsidered applicable for reporting under the Order in the case of the standalonefinancial statements.

(i) In respect of its fixed assets:

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

(b) The Company has a program of verification of fixed assets to cover all the items ina phased manner over a period of three years which in our opinion and the opinion of theother auditors (division / component auditors) is reasonable having regard to

the size of the Company and the nature of its assets. Pursuant to the program certainfixed assets were physically verified by the Management during the year. According to theinformation and explanations given to us and the other auditors (division / componentauditors) no material discrepancies were noticed on such verification.

(ii) In respect of its inventories:

(a) As explained to us and the other auditors (division / component auditors) theinventories except for goods in transit were physically verified during the year by theManagement at reasonable intervals.

(b) In our opinion and the opinion of the other auditors (division / componentauditors) and according to the information and explanations given to us and the otherauditors (division / component auditors) the procedures of physical verification ofinventories followed by the Management were reasonable and adequate in relation to thesize of the Company and the nature of its business.

(c) In our opinion and the opinion of the other auditors (division / componentauditors) and according to the information and explanations given to us and the otherauditors (division / component auditors) the Company has maintained proper records of itsinventories and no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us and the other auditors(division / component auditors) the Company has granted loans secured or unsecured tocompanies firms or other parties covered in the Register maintained under Section 189 ofthe Companies Act 2013 (hereinafter referred to as "the Act") where:

(a) In respect of loans granted to an associate:

(I) There is no receipt of the principal amount of 7 512.0 Million and the interestthereon of 7 88.8 Million.

(II) There is no evidence of reasonable steps having been taken for the recovery of theprincipal outstanding or interest receivable. As represented to us by the Management ofthe Company the Company is evaluating various options to recover its dues in respect ofthe principal amount and the interest thereon.

Refer Note 45 to the Financial Statements.

(b) In respect of the other loans:

(I) The receipts of the principal amounts have been regular / as per stipulations. Nointerest was due during the year in respect of such loans.

(II) There is no overdue amount remaining outstanding as at the year-end.

(iv) In our opinion and the opinion of the other auditors (division / componentauditors) and according to the information and explanations given to us and the otherauditors (division / component auditors) having regard to the explanations that some of

the items purchased are of a special nature and suitable alternative sources are notreadily available for obtaining comparable quotations and that some of the items sold areof a special nature where there are no similar transactions with other parties there isan adequate internal control system commensurate with the size of the Company and thenature of its business with regard to purchases of inventory and fixed assets and the saleof goods and services. During the course of our and the other auditors (division /component auditors) audit we and the other auditors (division / component auditors) havenot observed any continuing failure to correct major weakness in such internal controlsystem.

(v) According to the information and explanations given to us and the other auditors(division / component auditors) the Company has not accepted any deposit from the publicduring the year in terms of the provisions of Sections 73 and 76 or any other relevantprovisions of the Act.

(vi) We and the other auditors (division / component auditors) have broadly reviewedthe cost records maintained by the Company pursuant to the Companies (Cost Records andAudit) Rules 2014 as amended and the Cost Accounting Records (Pharmaceutical Industry)Rules 2011 prescribed by the Central Government under sub-section (1) of Section 148 ofthe Act and are of the opinion that prima facie the prescribed cost records have beenmade and maintained. We and the other auditors (division / component auditors) havehowever not made a detailed examination of the cost records with a view to determinewhether they are accurate or complete.

(vii) According to the information and explanations given to us and the other auditors(division / component auditors) in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Sales Tax Wealth TaxService Tax Customs Duty Excise Duty Value added Tax Cess and other material statutorydues applicable to it with the appropriate authorities though there have been slightdelays in few cases.

(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Sales Tax Wealth Tax Service Tax Customs Duty ExciseDuty Value added Tax Cess and other material statutory dues in arrears as at 31st March2015 for a period of more than six months from the date they became payable.

(c) Details of dues of Income Tax Sales Tax Wealth Tax Service Tax Customs DutyExcise Duty and Value added Tax which have not been deposited as at 31st March 2015 onaccount of disputes are given below:

Statute Nature of Dues Forum where Dispute is Pending Period to which the Amount Relates Amount Involved (Rs in Million)
Income Tax Act 1961 Income Tax Interest and Penalty Commissioner 1998-99 2005-06 2006-07 and 2008-09 to 2010-11

3202.4

Income Tax Appellate Tribunal (ITAT) 1995-96 2007-08 and 2009-10 2912.4
Sales Tax Act/ VAT (Various States) Sales Tax Interest and Penalty Assistant / Deputy /Joint 1998-99 to 2000-01 2003- 3.1
Commissioner 04 2004-05 and 2008-09
Tribunal 1999-2000 to 2001-02 1.8
Appellate Authority 2008-09 1.4
High Court 1999-2000 2001-02 to 200304 and 2005-06 to 2010-11 24.0
Entry Tax Madhya Pradesh Commercial Tax Appellate Board 2009-10 2.5
Wealth Tax Act 1957 ' Wealth Tax Commissioner 2010-11 0.1
Tribunal 2007-08 to 2009-10 0.3
The Central Excise Act 1944 Service Tax Customs Excise and Service Tax Appellate Tribunal (CESTAT) Delhi 2006 to 2011 4.4
Customs Act 1962 Custom Duty Penalty High Court 2000-01 15.4
and Interest
The Central Excise Act 1944 Excise Duty Interest and Penalty Assistant / Deputy / Joint 1995-96 to 1998-99 and 892.0
Commissioner 2000-01 to 2014-15
Tribunal 1999-00 to 2013-14 594.3
High Court 1989-90 to 1998-99 and 2002-03 to 2004-05 60.5
Supreme Court 1995-96 to 2003-04 21.5
Sales Tax Act Value Added Tax Additional / Assistant / Deputy / 2005-06 to 2008-09 and 17.7
(Various States) Joint/ Senior Joint Commissioner 2010-11 to 2012-13
Tribunal 2008-09 1.2
High Court 2009-10 and 2010-13 94.0

There were no dues of Cess which have not been deposited as on 31st March 2015 onaccount of disputes.

(d) The Company has been regular in transferring amounts to the Investor Education andProtection Fund in accordance with the relevant provisions of the Companies Act 1956 (1of 1956) and Rules made thereunder within time.

(viii) The Company does not have accumulated losses of the Company at the end of thefinancial year however the Company has incurred cash losses during the financial yearcovered by our audit and in the immediately preceding financial year.

(ix) In our opinion and the opinion of the other auditors (division / componentauditors) and according to the information and explanations given to us and the otherauditors (division / component auditors) the Company has not defaulted in the repaymentof dues to financial institutions banks and debenture holders.

(Rs) In our opinion and the opinion of the other auditors (division / componentauditors) and according to the information and explanations given to us and the otherauditors (division / component auditors) the terms and conditions of the guarantees givenand letters of comfort issued by the Company for loans taken by others from banks andfinancial institutions are not prima facie prejudicial to the interests of the Company.

(xi) In our opinion and the opinion of the other auditors (division / componentauditors) and according to the information and explanations given to us and the otherauditors (division / component auditors) except for term loans lying unutilised as at31st March 2015 the term loans have been applied by the Company during the year for thepurposes for which they were obtained.

(xii) To the best of our and the other auditors (division / component auditors)knowledge and according to the information and explanations given to us and the otherauditors (division / component auditors) no fraud by the Company and no material fraud onthe Company has been noticed or reported during the year.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm's Registration No. 117366W/W-100018)

RAJESH K. HIRANANDANI

Partner

(Membership No. 36920)

Place of Signature: Mumbai

Date: 29th May 2015 [11th August 2015 as to effect the matters discussed underparagraphs 1 and 2 of the 'Emphasis of Matter' section above]