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Ind-Swift Laboratories | Auditor's Report > Pharmaceuticals > Auditor's Report from Ind-Swift Laboratories - BSE: 532305, NSE: INDSWFTLAB
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Ind-Swift Laboratories

BSE: 532305|NSE: INDSWFTLAB|ISIN: INE915B01019|SECTOR: Pharmaceuticals
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Auditor's Report (Ind-Swift Laboratories) Year End : Mar '18

TO THE MEMBERS OF IND-SWIFT LABORATORIES LIMITED

We have audited the accompanying standalone Ind AS financial statements of IND-SWIFT LABORATORIES LIMITED (“the Company”), which comprises the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss , Statement of Cash Flows and the Statement for changes in Equity for the year then ended, include and a summary of significant accounting policies and other explanatory information. (hereinafter referred to as ‘standalone Ind AS financial statements’).

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 and presentation of these standalone Ind AS financial statements that gives a true and fair view of the financial position, financial performance, cash flows and changes in equity of the Company in accordance with accounting principles generally accepted in India, including the Indian Accounting Standards(Ind AS) specified under section 133 of the Act, read with relevant rules there. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone Ind AS 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 standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS 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 standalone Ind AS 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 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 standalone Ind AS 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 Ind AS 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 March 31, 2018, its profits, total comprehensive income its cash flows and changes in equity for the year ended on that date.

Emphasis of Matters

Without qualifying our opinion, we draw attention to the following matters in the Notes to the standalone Ind AS financial statements:

a) Refer Note No. XII of Ind AS Financial Statements in regard to following:

- As on 31.03.2018 Seven Banks/ Financial Institutions have transferred their entire Loan Portfolio to their respective Assets Reconstruction Companies.

- During the year in pursuance of Ind AS -18 “ Revenue Recognition “ issued by ICAI, the company has not provided impact in the books of accounts on account of waiver of liability and interest on loan pending completion of one time settlement of loans of State Bank of Patiala ( now merged with State Bank of India) & State Bank of India.

- During the year in pursuance of Ind AS -18 “ Revenue Recognition” the company has booked income of Rs.4587.45 Lacs on account of One time Settlement with SIDBI,Mahindra & Mahindra Services Limited and State Bank of Hyderabad( now merged with State bank of India).

- As on 31.03.2018 Three banks have declared the accounts of the company as NPA.

b) During the last year, a fire incidence had occurred in one of the plant in Derabassi unit of the company,

However the company has assessed the loss due to fire and has booked insurance claim amounting to Rs.657.73 Lacs. Further as per the opinion of the management this incident of fire does not have any impact on the going concern of the company. (Refer Note no. XLI to Financial Statements).

c) During the year the company has received the proceeds of insurance claim recoverable lodged with “the United India Insurance company” against full and final settlement of the same , thus resulting the loss on claim amounting to Rs.116.61 Lacs. (Refer Note no. XL to Financial Statements).

d) During the year the company has written off Intangible assets and capital WIP intangible amounting to Rs. 4337.34 Lacs & Rs. 263.10 Lacs respectively considering no expected future cash flows from these products looking into market scenario. ( Refer Note no. XXXIX to Financial Statements).

e) The Provisions of the Companies Act, 1956 (Further amended to Companies act 2013), where the company has got its fixed Deposit Scheme restructured vide order No. C.P 27/01/2013, dated 30.09.2013 of Company Law Board. The Company has been granted extension of time of repayment of those deposits. (Refer Note. No. XII of Ind AS Financial Statements).

f) Regarding payment of Managerial Remuneration of Rs.407.68 Lacs for the financial year ended 31 march 2018 which is same since 2012, a sum of Rs. 371.67 Lacs has been disallowed in terms of limits prescribed under section 196,197 & 198 read with Part II of Schedule V of Companies Act, 2013 during the year which is in addition to the amount already disallowed pertaining to the earlier years. Further the company has filed necessary application to Central Government which is pending approval as on date. Pending the ultimate outcome of the above said matter which is presently unascertainable, no adjustments have been recorded in the statement (Refer Note No. XIX of Financial Statements).

Without qualifying our opinion, we draw attention to the following matters in the Notes to the Standalone Ind AS financial Statements:

The Comparative Financial Information of the company for the transition date opening balance sheet as at 01st April 2016 and for the year ended 31.3.2017 included in these standalone Ind AS Financial statements, are based on the previously issued statutory financial statements prepared in accordance with the companies (Accounting Standards) Rules 2006 audited by the predecessor auditors whose report expressed an unqualified opinion on those standalone financial statements ,as adjusted for the differences in the accounting principles adopted by the company on the transition to the Ind AS, which have been audited by us.

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 paragraphs 3 and 4 of the Order.

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 purpose 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 and proper returns adequate for the purpose of our audit ;

(c) The Balance Sheet, Statement of Profit and Loss including other comprehensive income, Cash Flow Statement and the statement of changes in equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone Ind AS 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 written representations received from the directors as on March 31, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018, 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 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 XXIII to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company;

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

(b) According to information and explanations given by the management, the company has a system of physical verification of all its fixed assets over a period of four years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) According to information and explanations given by the management, the title deeds of immovable properties included in fixed assets are held in the name of the Company. Except in case of the following immovable properties where the title deeds are not in the name of the company:

In case of land:

No. of cases

Leasehold/

Freehold

Gross Block as at 31st March, 2018

Net Block as at 31st March, 2018

Remarks

2

Freehold

Rs. 13.79 Crores

Rs. 13.79 Crores

The cost of land amounting to Rs. 13.79 Crores includes the following :

- land measuring 29 kanals & 3 Marlas amounting to Rs. 9.75 crores was purchased on Power of Attorney from Fortune (India) constructions Ltd.

- land measuring 20 kanals & 17 Marlas amounting to Rs. 4.03 crores was purchased on Power of Attorney from Essix Biosciences Limited

1

Leasehold

Rs.171.89 Lacs

Rs.149.70 Lacs

Lease hold land Jammu Plant, Samba

(ii) As explained to us, the inventories, excluding stocks with some of the third parties, were physically verified during the year by the management at reasonable intervals and no material discrepancies were noticed on physical verification. In respect of inventories lying with third parties, these have substantially been confirmed by them.

(iii) According to information and explanations given to us the Company has not granted loans secured or unsecured during the year to companies , firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013, and hence reporting under Accordingly, paragraph 3 (iii) of the Order is not applicable.

(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, in respect of loans, investments, guarantees and security made.

(v) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of sections 73 to 76 of the Companies Act, 2013 and the rules framed thereunder and the directives issued by The Reserve Bank of India with regards to the deposits accepted from the public .

(vi) The maintenance of cost records has been specified by the Central Government Under sub section (1) of section 148 of the act. We have broadly reviewed the cost records maintained by the Company pursuant to the companies( Cost records and audit) Rules 2014, as amended , prescribed by the Central Government under sub-section (1) of section 148 of the act and are of the opinion that, prima facie the prescribed cost records have been made and maintained. We have however not made a detailed examination of the cost records with a view to determine whether they are accurate or not.

(vii) According to information and explanations given to us in respect of Statutory Dues;

(a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues applicable to it though there have been slight delays in few cases.

(b) There were no undisputed amounts payable in respect of provident fund, employees’ state insurance, income-tax, service tax, sales-tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) the dues outstanding of income-tax, sales-tax, service tax, duty of custom, duty of excise ,value added tax and cess on account of any dispute, are as follows:

Name of the Statute

Nature of Dues

Amount (In Rs. Lacs )

Period to which the amount relates

Forum where dispute is pending

Income Tax Act,1961

Demand Amount as per Order

0.22

AY 2006-07

No appeals

Income Tax Act,1961

Demand Amount as per Order

31.08

AY 2007-08

CIT(A)

Income Tax Act,1961

Demand Amount as per Order

11.09

AY 2009-10

ITAT

Income Tax Act,1961

Demand Amount as per Order

24.65

AY 2010-11

ITAT

Income Tax Act,1961

Demand Amount as per Order

37.00

AY 2011-12

ITAT

Income Tax Act,1961

Demand Amount as per Order

145.04

AY 2012-13

ITAT

The Punjab Vat Act,2005

Sale tax, Penalty & Interest

31.94

April 2006 to March 2007

Supreme Courtl

The Punjab Vat Act,2005

Sale tax, Penalty & Interest

46.40

April 2007 to March 2008

DETC ( Appeals)

The Punjab Vat Act,2005

Sale tax, Penalty & Interest

48.46

April 2012 to March 2013

DETC ( Appeals)

The Punjab Vat Act,2005

Sale tax, Penalty & Interest

238.35

2010-11

DETC ( Appeals)

Jammu Vat Act

Sale tax, Penalty & Interest

1.35

April 2012 to March 2013

Commissioner

Appeals

Jammu Vat Act

Sale tax, Penalty & Interest

32.20

April 2013 to March 2014

ETC (Appeal)

The Custom Act, 1962

Differential CD

23.06

2012-13

CESTAT, Ahmedabad

The Central Excise Act, 1944

Penalty under Excise Rules

0.84

2009-10

CESTAT , Chandigarh

The Central Excise Act, 1944

Service Tax & Penalty Thereon

4.11

2006-07, 2007-08, 200809, 2009-10, 2010-11

CESTAT , Chandigarh

The Central Excise Act, 1944

Service Tax & Penalty Thereon

41.14

2009-10, 2010-11, 2011-12

Commissioner (Appeal), Chandigarh

The Central Excise Act, 1944

Service Tax & Penalty Thereon

14.66

2011-12

CESTAT , Chandigarh

The Central Excise Act, 1944

Service Tax & Penalty Thereon

82.19

2012-13

CESTAT , Chandigarh

The Central Excise Act, 1944

Service Tax & Penalty Thereon

29.03

2013-14

CESTAT , Chandigarh

The Central Excise Act, 1944

Service Tax & Penalty Thereon

69.89

2014-15

CESTAT , Chandigarh

The Central Excise Act, 1944

Penalty under Excise Rules

6.60

2005-06, 2006-07, 200708, 2008-09, 2009-10

CESTAT , Chandigarh

(viii) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to the financial institution, bank or debenture holders. The details of such default are as follows:

Particulars

Amount of default as at 31st March, 2018 (Rs. In Lacs)

Period of default

Remarks, if any

i) Name of the lenders in case of:

Financial Institution:

1.DEG

6651.28

More than 3 years

Status not known to company

Banks:

1.Canara Bank

541.44

More than 4 years

Declared NPA by the Bank

2.Bank Of Baroda

10099.47

More than 3 years

Status not known to company

(ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3 (ix) of the Order is not applicable.

(x) According to the information and explanations given by the management, we report that no fraud by the Company or no fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.

(xi) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/ provided the following amounts for managerial remuneration which will not be allowed as mandated under section 197 read with Schedule V to the Act and the approval granted by the Central Government on application by the company.

Payment made to: Director/ WTD/ MD/ Manager

Amount approved by Central Government

Amount due for recovery for the year ending 31 March, 2018

Steps taken to secure the recovery of the amount

Remarks, if any

407.68 Lacs

36.00 Lacs

371.68 Lacs

The company has applied to the Central Government for the requisite approval.

Approval is still pending as on 31.03.2018.Further the amount recoverable is in addition to the amount already disallowed pertaining to the earlier years.

(xii) In our opinion, the Company is not a Nidhi company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has complied with the provisions of the Act with respect to shares issued under preferential allotment during the year.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

(xvi) the Company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the Order are not applicable to the Company

To the Members of Ind-Swift Laboratories Limited

We have audited the internal financial controls over financial reporting of Ind-Swift Laboratories Limited(“the Company”) as of March 31, 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Avishkar Singhal & Associates

Chartered Accountants

(Regd No.:017362N)

Avishkar Singhal

Partner

Membership No.: 098689

Place of Signature: Chandigarh

Date: 30.05.2018

Source : Dion Global Solutions Limited
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