1. We have audited the attached Balance Sheet of Novartis India
Limited (the ''company''), as at 31st March, 2011, and the related Profit
and Loss Account and Cash Flow Statement for the year ended on that
date annexed thereto, which we have signed under reference to this
report. These financial statements are the responsibility of the
company''s management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditor''s Report) Order, 2003 as
amended by the Companies (Auditor''s Report) (Amendment) Order, 2004
(together the ''Order'') issued by the Central Government of India in
terms of sub-section (4A) of Section 227 of ''The Companies Act, 1956''
of India (the ''Act'') and on the basis of such checks of the books and
records of the company as we considered appropriate and according to
the information and explanations given to us, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
(a) We have 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 appears from our examination of
those books;
(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report comply with the accounting
standards referred to in sub-section (3C) of Section 211 of the Act;
(e) On the basis of written representations received from the
directors, as on 31st March, 2011 and taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March, 2011
from being appointed as a director in terms of clause (g) of
sub-section (1) of Section 274 of the Act;
(f) In our opinion and to the best of our information and according to
the explanations given to us, the said financial statements together
with the notes thereon and attached thereto give in the prescribed
manner the information required by the Act and give a true and fair
view in conformity with the accounting principles generally accepted in
India:
(i) in the case of the Balance Sheet, of the state of affairs of the
company as at 31st March, 2011;
(ii) in the case of the Profit and Loss Account, of the profit for the
year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Annexure to Auditors'' Report
[Referred to in paragraph 3 of the Auditors'' Repcrt of even date to the
members of Novartis India Limited on the financial statements for the
year ended 31st March, 2011]
1. (a) The company is maintaining proper records showing full
particulars including
quantitative details and situation of fixed) 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 the 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 between the book records and the physical inventory have
been noticed.
(c) In our opinion and according to the information and explanations
given to us, a substantial part of fixed assets has not been disposed
of by the company during the year.
2. (a) The inventory has beer physically verified by the management
during the year. In our
opinion, the frequency of verification is reasonable.
(b) In our opinion, the procedures of physical verification of
inventory followed by the management are reasonable and adequate in
relation to the size of the company and the nature of its business.
(c) On the basis of our examination of the inventory records, in our
opinion, the company is maintaining proper records of inventory. In our
opinion, the discrepancies noticed on physical verification of
Inventory as compared to book records were not material.
3. (a) The company has not granted any loans, secured or unsecured, to
companies, firms
or other parties covered in the register maintained under Section 301
of the Act. Accordingly, clauses (iii)(b) to (iii)(d) of paragraph 4
of the Order are not applicable to the company for the current year.
(b) The company has not teken any loans, secured or unsecured, from
companies, firms or other parties covered in the register maintained
under Section 301 of the Act. Accordingly, clauses (iii)(f) and
(iii)(g) of paragraph 4 of the Order are not applicable to the company
for the current year.
4. In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the company and the nature of its business for the
purchase of inventory and fixed assets and for the sale of goods and
services. Further, on the basis of our examination of the books and
records of the company and according to the information and
explanations given to us, we have neither come across nor have we been
informed of any continuing failure to correct major weaknesses in the
aforesaid internal control system.
5. (a) In our opinion and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in Section 301 of the Act have been entered in the register
required to be maintained under that Section.
(b) In our opinion and according to the information and explanations
given to us, in respect of the transactions made in pursuance of
contracts or arrangements entered in the register maintained under
Section 301 of the Act and exceeding the value of Rupees Five Lakhs in
respect of any party during the year, prevailing market prices at the
relevant time are not available as these transactions are of a special,
nature.
6. In our opinion and according to the information and explanations
given to us, the company has complied with the provisions of Sections
5>8A, 58AA or any other relevant provisions of the Act and the
Companies (Acceptance of Deposits) Rules, 1975 with regard to the
deposits accepted from the public. According to the information and
explanations given to us, no order has been passed by the Company Law
Board or National Company Law Tribunal or Reserve Bank of India or
any Court or any other Tribunal on the company in respect of the
aforesaid deposits.
7. In our opinion, the company has an internal audit system
commensurate with its size and nature of its business.
8. We have broadly reviewed the books of account maintained by the
company in respect of the products where, pursuant to the Rules made by
the Central Government of India, the maintenance of cost records has
been prescribed under clause (d) of sub-section (1) of Section 209 of
the Act and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained. We have not,
however, made a detailed examination of the records with a view to
determine whether they are accurate or complete.
9. (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 including
provident fund, investor education and protection fund, employees'' state
insurance, income-tax, sales tax, wealth tax, service tax, customs
duty, excise duty, cess and other material statutory dues as applicable
with the appropriate authorities in India.
(b) According to the information and explanations given to us and the
records of the company examined by us, there are no dues of wealth-tax,
service tax and cess which have not been deposited on account of any
dispute. The particulars of dues of income-tax, sales tax, customs duty
and excise duty as at 31st March, 2011 which have not been deposited on
account of a dispute, are as follows -
Name of the Nature of dues Amount* Period to which
the Forum where the
statute Rs.''OOO amount relates dispute is
pending
The Income-
tax Income-tax 23,128 Assessment Years Appellate
Act, 1961 2006-2007 and Authority - up
to
2007-2008 Commissioner''s
level
The Central
Sales Sales tax
including 223,986 2000-2001 to Appellate
Tax Act, 1956
and interest and
penalty, 2008-2009 and Authority -
up to
Local Sales
Tax as applicable 2010-2011 Commissioner''s
Acts level
9,893 1993-1994, Tribunal
2000-2001 to
2002-2003 and
2004-2005
245 1997-1998 The High
Court of Kerala
The Customs
Act, Customs Duty 393 2002-2003 Appellate
1962 Authority -
up to
Commissioner''s
level
The Central
Excise Excise duty
including 551 1990 and June Appellate
Act,1944 penalty, as
applicable 1993 to October Authority -
up to
1993 Commissioner''s
level
4,479 January 1987 to Customs,Excise
February 1993 and & Service Tax
August 1993 to Appellate
Tribunal
December 1996
* Net of amounts paid including under piotest.
10. The company has no accumulated losses as at 31st March, 2011 and
has not incurred any cash losses in the financial year ended on that
date or in the immediately preceding financial year.
11. According to the records of the company examined by us and the
information and explanations given to us, the company has not defaultec
in repayment of dues to any financial institution or bank or debenture
holders.
12. The company has not granted any loans and advances on Ihe basis of
security by way of pledge of shares, debentures and other securities.
13. The provisions of any special statute applicable to chit
fund/nidhi/mutual benefit fund/ societies are not applicable to the
company.
14. The company is not a dealer or trader in shares, securities,
debentures and other investments.
15. According to the information and explanations given to us, the
company has not given any guarantee for loans taken by others from
banks or financial institutions during the year.
16. In our opinion, the company has not obtained any term loans that
were not applied for the purposes for which these were raised.
17. On the basis of an overall examination of the Balance Sheet of the
company, in our opinion and according to the information and
explanations given to us, there are no funds raised on short-term basis
which have been used for long-term investment.
18. The company has not made any preferential allotment af shares to
parties and companies covered in the register maintained under Section
301 of the Act during the year.
19. The company has not issued any debentures.
20. The company has not raised any money by public issues during the
year.
21. During the course of our examination of the books and records of
the company, carried out in accordance with the generally accepted
auditing prac\ices in India and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the company, noticed or reported during the year, nor
have we been informed of such case by the management.
For Price Waterhouse
Firm Registration No. 007568S
Chartered Accountants
Himanshu Goradia
Partner
Mumbai, 24th May 2011 Membership No. 45668
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