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Dr Reddys Laboratories

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« Mar 15
Auditor's Report (Dr Reddys Laboratories) Year End : Mar '16
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 2016, 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. 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 2016 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, 2016 (the
 Order), issued by the Central Government of India in terms of
 sub-section (11) of section 143 of the Act, we give in the Annexure A,
 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 2016 taken on record by the Board of
 Directors, none of the directors is disqualified as on 31 March 2016
 from being appointed as a director in terms of Section 164 (2) of the
 Act;
 
 (f) With respect to the adequacy of the internal financial controls
 over financial reporting of the Company and the operating
 effectiveness of such controls, refer to our separate report in
 Annexure B; and
 
 (g) With respect to the other matters to be included in the
 Auditors''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,
 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 A 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 as of and for the year ended 31
 March 2016, we report that:
 
 i.  (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fi xed
 assets.
 
 (b) The fixed assets are physically verified by the Management
 according to a phased programme designed to cover all the items over a
 period of three years which, in our opinion, is reasonable having
 regard to the size of the Company and nature of its assets. Pursuant to
 the programme, a portion of the fixed assets has been physically
 verified by the Management during the year and no material
 discrepancies have been noticed on such verification.
 
 (c) According to the information and explanations given to us and on
 the basis of our examination of the records of the Company, the title
 deeds of immovable properties as disclosed in Note 2.7 to these
 standalone financial statements, are held in the name of the Company.
 
 ii. The physical verification of inventory, excluding stocks lying
 with third parties, have been conducted at reasonable intervals by the
 Management during the year. In respect of inventories lying with third
 parties, these have substantially been confirmed by them. The
 discrepancies noticed on physical verification of inventory, as
 compared to book records were not material.
 
 iii. The Company has granted unsecured loans to one company and two
 body corporates covered in the register maintained under Section 189 of
 the Companies Act, 2013 (the Act). There are no firms, Limited
 Liability Partnerships and other parties covered in the register
 maintained under Section 189 of the Act.
 
 (a) In respect of the aforesaid loans, the terms and conditions under
 which such loans were granted are not prejudicial to Company''s
 interest.
 
 (b) In respect of the aforesaid loans, no schedule for repayment of
 principal and payment of interest has been stipulated by the Company.
 Therefore, in the absence of stipulation of repayment terms, we don''t
 make any comment on the regularity of repayment of principal and
 payment of interest.
 
 (c) In respect of the aforesaid loans, there is no amount which is
 overdue for more than ninety days.
 
 iv. In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Section
 185 and 186 of the Act, with respect to the loans and investments made
 and guarantees and securities provided by it.
 
 v. The Company has not accepted any deposits from the public within the
 meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed
 thereunder to the extent notified.
 
 vi. We have broadly reviewed cost records maintained by the Company
 pursuant to the Rules prescribed by the Central Government 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 with a
 view to determine whether they are accurate or complete.
 
 vii. (a) According to the information and explanations given to us and
 the records of the Company examined by us, in our opinion, the Company
 is generally regular in depositing undisputed statutory dues in respect
 of provident fund, employees''state insurance, income-tax, sales-tax,
 service tax, duty of customs, duty of excise, value added tax, cess and
 other material statutory dues, as applicable, with 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 2016 for a
 period of more than six months from the date they became payable.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by 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.
 
 viii. According to the records of the Company examined by us and the
 information and explanations given to us, the Company has not defaulted
 in repayment of loans and borrowings to its bankers. The Company did
 not have any debenture holders during the year.
 
 ix. The Company has not raised any monies by way of initial public
 offer, further public offer (including debt instruments) and term loans
 during the year.  Accordingly, the provisions of clause 3(ix) of the
 Order are not applicable to the Company.
 
 x. During the course of our examination of the books and records of the
 Company, carried out in accordance with the generally accepted auditing
 practices in India, and according to the information and explanations
 given to us, we have neither come across any instance of material fraud
 by the Company or on the Company by its officers or employees, noticed
 or reported during the year, nor have we been informed of any such case
 by the Management.
 
 xi. According to the information and explanations given to us and based
 on our examination of the records of the Company, the Company has paid/
 provided for managerial remuneration in accordance with the requisite
 approvals mandated by the provisions of Section 197 read with Schedule
 V of the Act.
 
 xii. In our opinion and according to the information and explanation
 given to us, the Company is not a Nidhi Company and the Nidhi Rules,
 2014 are not applicable to it. Accordingly, provisions of clause 3(xii)
 of the Order are not applicable.
 
 xiii. The Company has entered into transactions with related parties in
 compliance with the provisions of section 177 and 188 of the Act. The
 details of such related party transactions have been disclosed in the
 financial statements as required under Accounting Standard 18, Related
 Party Disclosures specified under section 133 of the Act, read with
 Rule 7 of the Companies (Accounts) Rules, 2014.
 
 xiv. According to the information and explanations given to us and
 based on our examination of the records of the Company, the Company has
 not made any preferential allotment or private placement of shares or
 fully or partly convertible debentures during the year.
 
 xv. According to the information and explanation given to us and based
 on our examination of the records of the Company, the Company has not
 entered into any non-cash transactions with the directors or persons
 connected with him. Accordingly, the provisions of clause 3(xv) of the
 Order are not applicable.
 
 xvi. The Company is not required to be registered under Section 45-IA
 of the Reserve Bank of India Act 1934. Accordingly, the provisions of
 the clause 3(xvi) of the Order are not applicable to the Company.
 
 Appendix 1 as referred to in paragraph vii (b) of Annexure A to the
 Independent Auditors''Report
 
                              Amount in                       Period to
                                                              which the
 Name of the 
 Statute      Nature of dues              Forum where the  
                                          dispute is pending
 
                              Rs.Million                      amount
                                                              relates
 
                                      1   Commissioner 
                                          Appeals             2002-2003
 
 Income Tax 
 Act, 1961    Income Tax              1   Income Tax 
                                          Appellate 
                                          Tribunal            1992-1993
 
                                      9   High Court          1991-1994
 
                                  1,703   Appellate
                                          Authority - upto 
                                          Commissioners       2003-2015
              Duty                  193
                                          CESTAT              1998-2014
 
                                     40   High Court          2002-2008
 
 Central 
 Excise Act, 
 1944         Interest                7   CESTAT              2006-2012
 
                                      1   Appellate 
                                          Authority - upto
                                          Commissioners       2009-2015 
 
              Penalty                74   CESTAT              2004-2014
 
                                      4   High Court          2002-2008
 
                                     24   Appellate 
                                          Authority - upto 
                                          Commissioners       1993-2015 
 
              Duty
 
 Customs 
 Act,1962                             6   CESTAT              2009-2010
 
              Penalty                 -   CESTAT              2009-2010
 
                                    504   CESTAT              2006-2015
 
              CENVAT Credit 
              of Service Tax        218   Appellate 
                                          Authority - upto
                                          Commissioners       2006-2015
 
                                      -   High Court          2005-2008 
 
 Finance 
 Act, 1994                          259   CESTAT              2006-2015 
 
              Penalty
 
                                      3   Appellate 
                                          Authority - upto  
                                          Commissioners       2006-2015
 
              Interest                1   CESTAT              2006-2015
 
                                    142   Sales Tax 
                                          Appellate Tribunal  2002-2013
 
              Tax                   501   Appellate 
                                          Authority - upto 
                                          Commissioners       2002-2016
 
 Central 
 Sales Tax 
 Act and                              2   High Court          2006-2008 
 Sales Tax 
 Acts of 
 various                             43   Appellate 
                                          Authority - upto 
                                          Commissioners       2002-2016
 states 
               Penalty               13   Sales Tax 
                                          Tribunal            2002-2013
 
                                      -   High Court          2006-2008
 
 Out of the total disputed dues, an amount of Rs.336 million has been
 paid under protest for sales tax related matters, Rs.130 million has
 been paid under protest for service tax related matters and Rs.13
 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 2016
Source : Dion Global Solutions Limited
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