1. We have audited the attached Balance Sheet of SUN PHARMACEUTICAL
INDUSTRIES LIMITED (“the Company”) as at 31st March, 2011, the Profit
and Loss Account and the Cash Flow Statement of the Company for the
year ended on that date, both annexed thereto. 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 the disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates
made by the 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 (CARO)
issued by the Central Government of India in terms of Section 227 (4A)
of the Companies Act, 1956, we give in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3
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 it appears from our examination of
those books;
(iii) the Balance Sheet, the Profit and Loss Account 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 Profit and Loss Account and
the Cash Flow Statement dealt with by this report are in compliance
with the Accounting Standards referred to in Section 211(3C) of the
Companies Act, 1956;
(v) in our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2011;
(b) in the case of the Profit and Loss Account, of the profit of the
Company for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
5. On the basis of written representations received from the Directors
as on 31st March, 2011 and taken on record by the Board of Directors,
we report that none of the Directors is disqualified as on 31st March,
2011 from being appointed as a director in terms of Section 274(1)(g)
of the Companies Act, 1956.
ANNEXURE TO THE AUDITORS'' REPORT
(Referred to in paragraph 3 of our report of even date)
(i) Having regard to the nature of the Company''s
business/activities/result clauses vi, xiii, xiv, xvi, xviii, xix and
xx of CARO are not applicable.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) The fixed assets were physically verified during the year by the
Management in accordance with a regular programme of verification
which, in our opinion, provides for physical verification of all the
fixed assets at reasonable intervals. According to the information and
explanation given to us, no material discrepancies were noticed on such
verification.
(c) The fixed assets disposed off during the year, in our opinion, do
not constitute a substantial part of the fixed assets of the Company
and such disposal has, in our opinion, not affected the going concern
status of the Company.
(iii) In respect of its inventory:
(a) As explained to us, the inventories (excluding inventories lying
with third parties) were physically verified during the year by the
Management at reasonable intervals. In respect of inventories lying
with third parties, these have substantially been confirmed by them.
(b) In our opinion and according to the information and explanation
given to us, the procedures of physical verification of inventories
followed by the Management were reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories and no material discrepancies were noticed on physical
verification.
(iv) The Company has neither granted nor taken any loans, secured or
unsecured, to/from companies, firms or other parties listed in the
Register maintained under Section 301 of the Companies Act, 1956.
(v) In our opinion and according to the information and explanations
given to us, having regard to the explanations that some of the items
purchased are of special nature and suitable alternative sources are
not readily available for obtaining 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 purchases of
inventory and fixed assets and the sale of goods and services. During
the course of our audit, we have not observed any major weakness in
such internal control system.
(vi) In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
(a) The particulars of contracts or arrangements referred to in Section
301 that needed to be entered into the Register maintained under the
said Section have been so entered.
(b) Where each of such transaction is in excess of Rs. 5 lakhs in respect
of any party, the transactions have been made at prices which are prima
facie reasonable having regard to the prevailing market prices at the
relevant time, except in respect of certain purchases for which
comparable quotations are not available and in respect of which we are
unable to comment.
(vii) In our opinion, the internal audit functions carried out during
the year by firms of Chartered Accountants appointed by the Management
have been commensurate with the size of the Company and the nature of
its business.
(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government for the
maintenance of cost records under Section 209(1)(d) of the Companies
Act, 1956 in respect of manufacture of formulation and bulk drug
products and are of the opinion that prima facie the prescribed
accounts and records have been made and maintained. We have, however,
not made a detailed examination of the records with a view to
determining whether they are accurate or complete. To the best of our
knowledge and according to the information and explanations given to
us, the Central Government has not prescribed the maintenance of cost
records for any other products of the Company.
(ix) According to the information and explanations given to us in
respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed
dues, including Provident Fund, Investor Education and Protection Fund,
Employees'' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service
Tax, Custom Duty, Excise Duty, Cess and other material statutory dues
applicable to it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Income-tax,
Sales Tax, Service Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and
other material statutory dues in arrears as at 31st March, 2011 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, Custom Duty
and Excise Duty, which have not been deposited as at 31st March, 2011
on account of disputes, are given below:
Statute Nature of Dues Forum where Period to which the Amount
involved
dispute is
pending amount relates (Rs. In
Million)
The Central Excise Duty, Assistant /
Deputy / 2002-03, 2004-05,
2005-06, 31.6
Excise Act, Interest and
Penalty Joint
Commissioner 2006-07, 2007-08,
2008-09,
1944 2009-10
Tribunal 1997-98, 1998-99,
1999-00, 259.5
2000-01, 2002-03,
2003-04, 2004-05,
2005-06, 2006-07,
2007-08, 2008-09
High Court 1998-99, 2001-02,
2006-07, 1.6
2007-08
Customs Act, Custom Duty, Settlement
Commission 2000-01 11.5
1962 Penalty and
Interest
Sales Tax
Act Sales Tax,
Interest and Assistant /
Deputy /
Joint 1994-95, 1998-99,
1999-00, 4.7
(Various
States) Penalty Commissioner 2000-01, 2002-03
Tribunal 1998-99, 2001-02,
2002-03, 2.9
2003-04, 2004-05
High Court 1981-82 to 1985-86,
2003-04 14.5
Income Tax Income tax and Tribunal 1996-97, 2002-03 0.9
Act, 1961 Interest
Commissioner 1997-98 8.4
Wealth Tax Wealth tax Commissioner 2003-04, 2004-05,
2008-09 0.2
Act, 1957
Employee
State Contribution
and Appellate
authority 1987 to 1992 0.2
Insurance Interest
Act, 1948
Drugs Drug Price
Equilisation Drug Prices
Liability
Review 1981-1987 14.0
(Price
Control) Account
liability and Committee
Order, 1979 interest
There were no unpaid disputed dues in respect of service tax and cess
during the year.
(x) The Company does not have any accumulated losses as at the end of
the year. The Company has not incurred cash losses in the financial
year and in the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in the repayment of dues to
banks. The Company does not have any dues to financial institutions and
has not issued any debentures.
(xii) In our opinion, the Company has maintained adequate records where
it has granted loans and advances on the basis of security by way of
pledge of shares. The Company has not granted any loans and advances on
the basis of security by way of pledge of debentures and other
securities.
(xiii) In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantees given by the
Company for loans taken by others from banks and financial
institutions, are not prima facie prejudicial to the interests of the
Company.
(xiv) In our opinion and according to the information and explanations
given to us and on an overall examination of the Balance Sheet of the
Company, we report that the funds raised on short-term basis have,
prima facie, not been used during the year for long-term investment.
(xv) To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no material fraud
on the Company has been noticed or reported during the year.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Registration No. 117366W)
Rajesh K Hiranandani
Partner
MUMBAI, 28th May, 2011 (Membership No. 36920)
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