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Ranbaxy Laboratories | Auditor's Report > Pharmaceuticals > Auditor's Report from Ranbaxy Laboratories - BSE: 500359, NSE: RANBAXY
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Ranbaxy Laboratories
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Dec 11
Auditor's Report (Ranbaxy Laboratories) Year End : Dec '12
a) We have audited the attached Balance Sheet of Ranbaxy Laboratories
 Limited ('the Company') as at 31 December 2012, the Statement of Proft
 and Loss and the Cash Flow Statement (collectively referred to as
 'fnancial statements') of the Company for the year ended on that date,
 annexed thereto. These fnancial statements are the responsibility of
 the Company's management. Our responsibility is to express an opinion
 on these fnancial statements based on our audit.

b) We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fnancial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fnancial statements. An audit also includes assessing the accounting principles used and signifcant estimates made by management, as well as evaluating the overall fnancial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

c) As required by the Companies (Auditor's Report) Order, 2003 ('the Order') issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, ('the Act'), we enclose in the Annexure, a statement on the matters specifed in paragraphs 4 and 5 of the said Order.

d) Further to our comments in the Annexure referred to above, we report that:

(i) 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;

(ii) 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;

(iii) the Balance Sheet, the Statement of Proft and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(iv) in our opinion, the Balance Sheet, the Statement of Proft and Loss and the 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, to the extent applicable;

(v) on the basis of written representations received from the directors of the Company as at 31 December 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualifed as at 31 December 2012 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

e) Without qualifying our opinion, we draw attention to note 37 of the fnancial statements, wherein it has been stated that on the basis of a legal advice, the Company is of the view that the appointment of and payment of remuneration to Mr. Arun Sawhney, CEO and Managing Director for the full year ended 31 December 2011 is in accordance with the conditions stipulated under Notifcation no. GSR 534(E) dated 14 July 2011 read with the clarifcation dated 16 August 2012 issued by the Ministry of Corporate Affairs.

f) In our opinion and to the best of our information and according to the explanations given to us, the said fnancial statements give the information required by the Act, in the manner so required and gives 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 the affairs of the Company as at 31 December 2012;

ii) in the case of the Statement of Proft and Loss, of the loss of the Company for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash fows of the Company for the year ended on that date.

Annexure to the Auditors' Report

(Referred to in our report of even date)

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of its fxed assets.

(b) The Company has a regular programme of physical verifcation of its fxed assets through which all fxed assets are verifed, in a phased manner, over a period of three years. In our opinion, this periodicity of physical verifcation is reasonable having regard to the size of the Company and the nature of its assets. As informed to us, no material discrepancies were noticed on such verifcation as carried out under the above programme during the current year.

(c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern assumption.

(ii) (a) The inventories, except goods-in-transit, have been physically verifed by the management during the year. In our opinion, the frequency of such verifcation is reasonable.

(b) In our opinion, the procedures of physical verifcation 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 inventories. As informed to us, the discrepancies observed on verifcation between the physical stocks and the book records were not material.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to or from companies, frms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 ('the Act').

(iv) In our opinion, and according to the information and explanations given to us, and having regard to the explanation that purchase of certain items of inventories and fxed assets are for the Company's specialised requirements, and similarly, certain goods sold are for the specialised 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 fxed assets, and for the sale of goods and services. In our opinion, and according to the information and explanations given to us, we have not observed any major weakness during the course of audit.

(v) In our opinion, and according to the information and explanations given to us, there are no contracts and arrangements, the particulars of which need to be entered into the register maintained under section 301 of the Act.

(vi) The Company has not accepted any deposits from the public.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under section 209(1)(d) of the Act, in respect of its products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not carried out a detailed examination of the records with a view to determine whether these are accurate or complete.

(ix) (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, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and other material statutory dues have generally been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us and on the basis of our examination of the records of the Company, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and other material statutory dues were in arrears as at 31 December 2012 for a period of more than six months from the date those became payable.

(b) According to the information and explanations given to us, there are no dues of Income Tax, Wealth Tax and Customs Duty which have not been deposited with the appropriate authorities on account of any dispute. According to the information and explanations given to us, the following dues of Excise Duty, Value Added Tax, Service Tax and Sales Tax have not been deposited by the Company on account of disputes:

Name of the Statute Nature of Amount Periods to Forum where the dispute is dues (Rs. in which the pending millions) amount relates to

Central Excise Act, 1944 Excise Duty 18.97 2001-02, Customs, Excise and Service Tax Appellate 2004 and 2005, Tribunal (CESTAT), Delhi 2007 and 2008, 2006 to 2011

Central Excise Act, 1944 Excise Duty 1.95 2004 to 2007 CESTAT, Mumbai

Central Excise Act, 1944 Excise Duty 6.77 2005 to 2008 Commissioner (Appeals),Chandigarh Bihar Value Added Tax Value Added Tax 10.47 2005-06 Commercial Tax Authority, Patna Act, 2005

Madhya Pradesh Value Value Added Tax 0.14 2008-09 Additional Commissioner of Commercial Added Tax, 2010 Tax, Indore

Uttar Pradesh Sales Tax Sales Tax 1.21 2008-09 Member Tribunal, Commercial Tax, Act, 1948 Lucknow

The Odisha Entry Tax Act, Sales Tax 0.34 April 2005 to Odisha Sales Tax Tribunal 1999 January 2007

Andhra Pradesh General Sales Tax 1.16 2004-05 Sales tax Appellate Tribunal Sales Tax Act, 1957

The Rajasthan Value Value Added Tax 0.45 2008-09 Deputy Commissioner Appeals Commercial Added Tax Act, 2003 Taxes, Jaipur

Delhi Value Added Tax Value Added Tax 0.10 2007-08 Joint Commissioner Trade and Tax Act, 2004 Department, Delhi

Madhya Pradesh Value Entry Tax 5.42 2009-10 Additional Commissioner,Indore Added Tax Act, 2002

Madhya Pradesh Value Value Added Tax 0.31 2011 The Appellate Authority Added Tax Act, 2002 Madhya Pradesh Commercial Tax, Ujjain

(x) The accumulated losses of the Company at the end of the year are not less than ffty percent of its net worth (without adjusting accumulated losses). As explained to us, these are primarily due to provision created for settlement with the Department of Justice (DOJ) of the United States of America for resolution of potential civil and criminal a legations by the DOJ (refer to note 8 of the fnancial statements). The Company has not incurred cash losses in the current fnancial year though it had incurred cash losses in the immediately preceding fnancial year.

(xi) 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, debenture holders and fnancial institutions.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual beneft fund / society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has issued letters of comfort and given guarantees for loans taken from banks by subsidiaries and an associate company respectively, are not prejudicial to the interests of the Company.

(xvi) In our opinion and according to the information and explanations given to us, except for term loans lying unutilised as at year end, the term loans taken by the Company have been applied for the purpose for which these were raised.

(xvii) According to the information and explanations given to us, the provision created for settlement with the DOJ amounting to Rs. 26,480 milion (refer to note 8 of the fnancial statements) by the Company in the previous accounting year have resulted in long-term funds being lower by Rs. 5,558.22 mi lion compared to long-term assets as at 31 December 2012. Accordingly, on an overa l examination of the Balance Sheet of the Company as at 31 December 2012, it appears that short term funds of Rs. 5,558.22 mi lion have been used for long-term purposes. As represented to us by the management, the shortfa l is temporary in nature and action is being taken to have long term funds within a short period of the amount being actua ly paid.

(xviii) The Company has not made any preferential allotment of shares during the year to parties and companies/ frms/ parties covered in the register maintained under section 301 of the Act.

(xix) According to the information and explanations given to us, the Company has created a security or charge in respect of debentures issued during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) According to the information and explanations given to us, no signifcant fraud on or by the Company has been noticed or reported during the course of our audit.

For B S R & Co.

Chartered Accountants

Registration No. 101248W

Vikram Aggarwal

Place : Gurgaon Partner

Dated : 26 February 2013 Membership No. 089826

Source : Dion Global Solutions Limited
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