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Dr Reddys Laboratories
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« Mar 14
Auditor's Report (Dr Reddys Laboratories) Year End : Mar '15
We have audited the accompanying standalone financial statements of Dr.
 Reddy''s Laboratories Limited (the Company), which comprise the
 balance sheet as at 31 March 2015, the statement of profit and loss and
 the cash flow statement for the year then ended, and a summary of the
 significant accounting policies and other explanatory information.
 
 Management''s Responsibility for the Standalone Financial Statements
 
 The Company''s Board of Directors is responsible for the matters stated
 in Section 134(5) 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 the Accounting Standards
 specified under Section 133 of the Act, read with Rule 7 of the
 Companies (Accounts) Rules, 2014. This responsibility also includes
 maintenance of adequate accounting records in accordance with the
 provisions of the Act for safeguarding the assets of the Company and
 for preventing and detecting frauds and other irregularities; selection
 and application of appropriate accounting policies; making judgments
 and estimates that are reasonable and prudent; and design,
 implementation and maintenance of adequate internal financial controls,
 that were operating effectively for ensuring the accuracy and
 completeness of the accounting records, relevant to the preparation and
 presentation of the financial statements that give a true and fair view
 and are free from material misstatement, whether due to fraud or error.
 
 Auditors'' Responsibility
 
 Our responsibility is to express an opinion on these standalone
 financial statements based on our audit.
 
 We have taken into account the provisions of the Act, the accounting
 and auditing standards and matters which are required to be included in
 the audit report under the provisions of the Act and the Rules made
 thereunder.
 
 We conducted our audit in accordance with the Standards on Auditing
 specified under Section 143(10) of the Act. Those Standards require
 that we comply with ethical requirements and plan and perform the audit
 to obtain reasonable assurance about whether the financial statements
 are free from material misstatement.
 
 An audit involves performing procedures to obtain audit evidence about
 the amounts and the disclosures in the financial statements. The
 procedures selected depend on the auditor''s judgment, including the
 assessment of the risks of material misstatement of the financial
 statements, whether due to fraud or error. In making those risk
 assessments, the auditor considers internal financial control relevant
 to the Company''s preparation of the financial statements that give a
 true and fair view in order to design audit procedures that are
 appropriate in the circumstances, but not for the purpose of expressing
 an opinion on whether the Company has in place an adequate internal
 financial controls system over financial reporting and the operating
 effectiveness of such controls. An audit also includes evaluating the
 appropriateness of the accounting policies used and the reasonableness
 of the accounting estimates made by the Company''s Directors, as well as
 evaluating the overall presentation of the financial statements.
 
 We believe that the audit evidence we have obtained is sufficient and
 appropriate to provide a basis for our audit opinion on the standalone
 financial statements.
 
 Opinion
 
 In our opinion and to the best of our information and according to the
 explanations given to us, 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 31 March 2015 and its profit and its cash flows for the year ended
 on that date.
 
 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 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.
 
 2. As required by Section 143(3) of the Act, we report that:
 
 (a) We have sought and obtained all the information and explanations
 which to the best of our knowledge and belief were necessary for the
 purposes of our audit;
 
 (b) In our opinion, proper books of account as required by law have
 been kept by the Company so far as it appears from our examination of
 those books;
 
 (c) The balance sheet, the statement of profit and loss 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 31 March 2015 taken on record by the Board of
 Directors, none of the directors is disqualified as on 31 March 2015
 from being appointed as a director in terms of Section 164(2) of the
 Act; and
 
 (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 Note 2.25 to the
 financial statements;
 
 ii. The Company has made provision, as required under the applicable
 law or accounting standards, for material foreseeable losses, if any,
 on long term contracts including derivative contracts; and
 
 iii. There has been no delay in transferring amounts, required to be
 transferred, to the Investor Education and Protection Fund by the
 Company.
 
 The Annexure referred to in the independent auditors'' report of even
 date to the members of Dr. Reddy''s Laboratories Limited (the Company)
 on the standalone financial statements for the year ended 31 March
 2015, we report that:
 
 i. (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The Company has a regular programme of physical verification of its
 fixed assets by which all the fixed assets are verified in a phased
 manner over a period of 3 years. In our opinion, the periodicity of 
 physical verification is reasonable having regard to the size of the 
 Company and the nature of its assets. No material discrepancies were 
 noticed on such verification.
 
 ii. (a) Inventories, except goods-in-transit and stocks lying with
 third parties have been physically verified by the management during
 the year. In our opinion, the frequency of such verification is 
 reasonable. For stocks lying with third parties at the year-end, 
 written confirmations have been obtained.
 
 (b) In our opinion, the procedures of physical verification of
 inventories followed by the management are reasonable and adequate in
 relation to the size of the Company and the nature of its business.
 
 (c) The Company is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 iii. (a) The Company has granted unsecured loans to seven subsidiary
 companies covered in the register maintained under Section 189 of the
 Companies Act, 2013 (the Act).
 
 (b) In the case of the loans granted to the companies listed in the
 register maintained under Section 189 of the Act, the borrowers have
 been regular in repaying the principal amounts as stipulated and in the
 payment of interest, wherever applicable.
 
 (c) There are no overdue amounts of more than rupees one lakh in
 respect of the loans granted to any of the companies, firms and other
 parties covered in the register maintained under section 189 of the
 Act.
 
 iv. In our opinion and according to the information and explanations
 given to us, and having regard to the explanation that purchases of
 certain items of inventories are for the Company''s specialized
 requirements and similarly certain goods sold are for the specialized
 requirements of the buyers and suitable alternative sources are not
 available to obtain comparable quotations, there is an adequate
 internal control system commensurate with the size of the Company and
 the nature of its business with regard to purchase of inventories and
 fixed assets and with regard to the sale of goods and services. We have
 not observed any major weakness in the internal control system during
 the course of the audit.
 
 v. The Company has not accepted any deposits from the public.
 
 vi. We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules prescribed by the Central Government for
 the maintenance of cost records under Section 148(1) of the Act, 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 records.
 
 vii. (a) According to the information and explanations given to us and
 on the basis of our examination of the records of the Company, amounts
 deducted/ accrued in the books of account in respect of undisputed 
 statutory dues including provident fund, employees'' state insurance, 
 income tax, sales tax, wealth tax, service tax, duty of customs, duty 
 of excise, value added tax, cess and other material statutory dues have 
 been generally regularly deposited during the year by the Company with 
 the appropriate authorities.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, employees''
 state insurance, income tax, sales tax, wealth tax, service tax, duty
 of customs, duty of excise, value added tax, cess and other material
 statutory dues were in arrears as at 31 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, the dues
 set out in Appendix - 1 in respect of income tax, sales tax, service
 tax, duty of customs, duty of excise and value added tax have not been
 deposited with the appropriate authorities on account of disputes. As
 explained to us, the Company did not have any disputed dues on account
 of wealth tax and cess.
 
 (c) According to the information and explanations given to us, the
 amounts which were required to be transferred to the investor education
 and protection fund in accordance with the relevant provisions of the
 Companies Act, 1956 (1 of 1956) and rules there under has been
 transferred to such fund within time.
 
 viii. The Company does not have any accumulated losses at the end of
 the financial year and has not incurred cash losses in the financial
 year and in the immediately preceding financial year.
 
 ix. In our opinion and according to the information and explanations
 given to us, the Company, has not defaulted in repayment of dues to its
 bankers or to any financial institutions, or to debenture holders
 during the year.
 
 x. In our opinion and according to the information and explanations
 given to us, the terms and conditions on which the Company has given
 guarantees for loans taken by others from banks or financial
 institutions are not prejudicial to the interests of the Company.
 
 xi. In our opinion and according to the information and explanations
 given to us by the management, term loans availed by the Company were
 applied for the purposes for which the loans were obtained.
 
 xii. According to the information and explanations given to us, no
 material fraud on or by the Company has been noticed or reported during
 the course of our audit.
 
 
 
 Name ot the Statute          Nature ot dues     Amount in 
                                                 Rs Million
 
 Income Tax Act, 1961         Income Tax             166
                                              
                                                       9
 
 Central Excise Act, 1944                          1,497
 
                              Duty                   268
 
                                                      35
 
                              Interest                 7
 
                              Penalty                  8
 
 Customs Act,1962 ,                                   26
 
                              Duty                    18
 
 
                              Penalty                 16
 
                              Interest                 1
 
 Finance Act, 1994                                   271
 
                              CENVAT Credit of       317
                              Service Tax
 
                                                      13
 
                              Penalty                206
 
 Central Sales Tax Act and                           143
 Sales Tax Acts of various    
 states                       Tax                    152
  
                                                       5
 
                              Penalty                 45
 
                                                      13
 
                              Interest                 1
 
 Name of the Statute        Forum where the dispute        Period to 
                            is pending                     which the 
                                                           amount relates
 
 Income Tax Act, 1961       Commissioner Appeals            2002-2006
 
                            Income Tax Appellate Tribunal   1992-2009
 
                            High Court                      1990-1994
 
 Central Excise Act, 1944   Appellate Authority - upto      2004-2015
                            Commissioners
 
                            CESTAT                          1998-2013
 
                            High court                      2002-2010
 
                            CESTAT                          2004-2008
 
                            CESTAT                          2004-2008
 
 Customs Act,1962           Appellate Authority - upto      2003-2014
                            Commissioners
 
                            Supreme Court                   1992-1999
 
                            Supreme Court                   1992-1999
 
                            Appellate Authority - upto      2014-2015
                            Commissioners
 
 Finance Act, 1994          CESTAT                          2006-2013
 
                            Appellate Authority - upto      2006-2015
                            Commissioners
 
                            High Court                      2005-2008
 
                            CESTAT                          2006-2012
 
                            Appellate Authority - upto      2011-2014
                            Commissioners
 
 Central Sales Tax Act and  Sales Tax Appellate Tribunal    2008-2009
 Sales Tax Acts of various 
 states                     Appellate Authority - upto      2004-2013
                            Commissioners
 
                            High Court                      2006-2013
 
                            Appellate Authority - upto      2008-2013
                            Commissioners
 
                            Sales Tax Tribunal              2005-2011
 
                            Appellate Authority - upto      2007-2013
                            Commissioners
 
 Out of total dues, an amount of Rs. 336 million has been paid under
 protest for sales tax related matters, Rs. 117 million has been paid
 under protest for service tax related matters, Rs. 18 million has been
 paid for custom related matters and Rs. 9 million has been paid for
 excise related matters.
 
 for B S R & Co. LLP
 Chartered Accountants
 Firm Registration No.: 101248W/W-100022
 
 Supreet Sachdev
 Partner
 Membership No.: 205385
 Place : Hyderabad 
 Date : 12 May 2015
Source : Dion Global Solutions Limited
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