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Auditor's Report
Report on the Financial Statements
I have audited the accompanying financial statements of Sterling Biotech Limited (the Company), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit & Loss and the Cash Flow Statement for the fifteen months ended on that date and a summary of significant accounting policies and other explanatory information.
Management''s Responsibility for the 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 financial statements that give a true and fair view of the financial position, financial performance and Cash Flow 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 the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditor''s Responsibility
My responsibility is to express an opinion on these financial statements based on my audit.
I 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 there under.
I conducted my audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that I 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 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 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 Company''s Directors, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion on the financial statements.
Opinion
In my opinion and to the best of my information and according to the explanations given to me, the aforesaid financial statements give the information required by the Companies Act, 2013 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 31st March, 2016, and its loss and its Cash Flows for the period 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 Companies Act 2013, I 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, I report that:
a) I have sought and obtained all the information and explanations, which to the best of my knowledge and belief, were necessary for the purposes of my Audit;
b) In my opinion, proper books of account, as required by law, have been kept by the company, so far as appears from my examination of those books;
c) The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;
d) In my opinion, the aforesaid 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 31st March, 2016, taken on record by the Board of Directors, none of the directors is disqualified as on 31st 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 my 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 & Auditors) Rules, 2014, in my opinion and to the best of my information and according to the explanations given to me:
i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements.
ii. The company did not have any material foreseeable losses on long term contracts including derivative contracts.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
Report on Companies (Auditor''s Report) Order, 2016 (''the Order'') issued by the Central Government in terms of Section 143(11) of the Companies Act, 2013 (''the Act'') of Sterling Biotech Limited (''the Company'').
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In my opinion, this periodicity of physical verification is reasonable having regard to the size of the company and the nature of its assets. In accordance with this programme, certain fixed assets were verified during the period and no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to me and on the basis of my examination of the records of the Company, title deeds of immovable properties are held in the name of the Company.
(ii) As explained to me, the inventories were physically verified during the period by the Management at reasonable intervals and no material discrepancies were noticed on physical verification.
(iii) During the period Company has not granted unsecured loan to companies covered in the register maintained under section 189 of the companies Act, 2013.
(a) In my opinion, terms and conditions on which loans had been granted to companies listed in the register maintained under section 189 of the Act were not, primafacie, prejudicial to the interest of the company.
(b) The parties have repaid the principal amount as stipulated.
(c) There are no overdue amounts of Loans granted to companies listed in the register maintained under section 189 of the Act.
(iv) In my opinion and according to the information and explanations given to me, the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of grant of loans, making investments and providing guarantees and securities, as applicable.
(v) The Company has not accepted any deposits from the public.
(vi) I have broadly reviewed the books of accounts maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the companies Act, 2013 and am of the opinion that prima facie, the prescribed accounts and records have been made and maintained. I have not, however, made a detailed examination of the same.
(vii) According to the information and explanations given to me, in respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax, Service Tax, Value Added Tax, duty of Customs, duty of Excise, Cess and other material statutory dues applicable to it with the appropriate authorities.
There were no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax, Service Tax, Value Added Tax, duty of Customs, duty of Excise, Cess and other material statutory dues in arrears as at March 31, 2016 for a period of more than six months from the date they became payable except '' 303,420/- processed demand raised by TDS CPC .
(b) According to the information and explanations given to me, the following dues of Income Tax, Sales Tax, Service Tax and Value Added Tax have not been deposited by the Company on account of disputes.
Name of the Statute |
Nature of the dues |
Amount unpaid |
Period to which the amount relates |
Forum where dispute is pending |
The Central Excise Act, 1994 |
Central Excise Duty/ Service Tax |
4,47,269 |
2015-2016 |
Commissioner Excise |
The Central Excise Act, 1994 |
Central Excise Duty/ Service Tax |
1,98,226 |
2014-2015 |
Commissioner Excise |
The Central Excise Act, 1994 |
Central Excise Duty/ Service Tax |
11,036 |
2014-2015 |
Excise officer |
The Central Excise Act, 1994 |
Central Excise Duty/ Service Tax |
Not identified |
2014-2015 |
Commissioner Excise |
State Sales Tax/VAT and CST |
Sales tax |
1,38,94,892 |
2001-2002 |
Supreme Court |
State Sales Tax/VAT and CST |
Sales tax |
1,43,58,662 |
2002-2003 |
Supreme Court |
State Sales Tax/VAT and CST |
Sales tax |
14,17,651 |
2003-2004 |
Supreme Court |
The Central Excise Act, 1944 |
Excise duty |
1,02,65,154 |
2003-2004 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty |
1,03,90,753 |
2004-2005 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty and Penalty |
1,03,00,000 |
2004-2005 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty |
18,49,925 |
2004-2005 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty |
1,59,18,617 |
2004-2005 to 2005-2006 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty |
1,25,53,250 |
2006-2007 to 2007-2008 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty |
1,24,45,900 |
2006-2007 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty |
1,60,96,386 |
2006-2007 to 2007-2008 |
CESTAT |
Name of the Statute |
Nature of the dues |
Amount unpaid |
Period to which the amount relates |
Forum where dispute is pending |
The Central Excise Act, 1944 |
Excise duty and Penalty |
50,00,000 |
2006-2007 to 2007-2008 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty |
2,76,20,043 |
2007-2008 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty and Penalty |
25,00,000 |
2007-2008 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty |
4,30,93,913 |
2008-2009 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty |
1,53,62,946 |
2008-2009 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty |
1,16,36,753 |
2009-2010 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty |
2,17,73,984 |
2010-2011 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty |
1,98,35,655 |
2011-2012 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty |
1,42,93,983 |
2011-2012 to 2012-2013 |
CESTAT |
The Central Excise Act, 1944 |
Excise duty |
1,16,47,766 |
2012-2013 to 2013-2014 |
Commissioner of central excise |
The Central Excise Act, 1944 |
Excise duty |
1,98,22,934 |
2013-2014 |
Commissioner of central excise |
The Central Excise Act, 1944 |
Excise duty |
2,09,67,416 |
2014-2015 |
Commissioner of central excise |
The Central Excise Act, 1944 |
Excise duty |
2,01,54,465 |
2014-2015 to 2015-2016 |
CESTAT |
The Finance Act, 1994- service tax |
Service tax and penalty |
5,83,644 |
2005-2006 to 2008-2009 |
Assistant Commissioner of central excise |
The Finance Act, 1994- service tax |
Service tax and penalty |
1,68,422 |
2008-2009 to 2009-2010 |
Assistant Commissioner of central excise |
Name of the Statute |
Nature of the dues |
Amount unpaid |
Period to which the amount relates |
Forum where dispute is pending |
The Finance Act, 1994- service tax |
Service tax |
79,104 |
2009-2010 |
Assistant Commissioner of central excise |
The Finance Act, 1994- service tax |
Service tax and penalty |
1,65,720 |
2010-2011 |
Assistant Commissioner of central excise |
The Finance Act, 1994- service tax |
Service tax |
26,074 |
2010-2011 to 2011-2012 |
Assistant Commissioner of central excise |
The Finance Act, 1994- service tax |
Service tax and penalty |
3,93,311 |
2009-2010 to 2010-2011 |
Assistant Commissioner of central excise |
The Finance Act, 1994- service tax |
Service tax |
3,33,182 |
2010-2011 to 2011-2012 |
Assistant Commissioner of central excise |
The Finance Act, 1994- service tax |
Service tax and penalty |
2,18,304 |
2007-2008 to 2009-2010 |
Assistant Commissioner of central excise |
The Finance Act, 1994- service tax |
Service tax |
3,92,926 |
2008-2009 to 2010-2011 |
Commissioner of central excise |
The Finance Act, 1994- service tax |
Service tax |
1,03,522 |
2011-2012 to 2012-2013 |
Commissioner of central excise |
The Finance Act, 1994- service tax |
Service tax |
1,01,030 |
2012-2013 to 2013-2014 |
Commissioner of central excise |
The Finance Act, 1994- service tax |
Service tax and penalty |
2,88,966 |
2013-2014 to 2014-2015 |
Commissioner of central excise |
The Finance Act, 1994- service tax |
Service tax and penalty |
2,21,124 |
2014-2015 to 2015-2016 |
Commissioner of central excise |
The Finance Act, 1994- service tax |
Service tax and penalty |
98,297 |
2015-2016 |
Commissioner of central excise |
The Finance Act, 1994- service tax |
Service tax and penalty |
20,75,866 |
2008-2009 to 2013-2014 |
Commissioner of central excise |
The Finance Act, 1994- service tax |
Service tax and penalty |
14,017 |
2012-2013 to 2013-2014 |
Commissioner of central excise |
The Finance Act, 1994- service tax |
Service tax, penalty and Interest |
38,556 |
2013-2014 to 2014-2015 |
Commissioner of central excise |
Name of the Statute |
Nature of the dues |
Amount unpaid |
Period to which the amount relates |
Forum where dispute is pending |
The Finance Act, 1994 - service tax |
Service tax, penalty and Interest |
36,334 |
2014-2015 to 2015-2016 |
Commissioner of central excise |
The Finance Act, 1994 - service tax |
Service tax |
8,112 |
2015-2016 |
Commissioner of central excise |
The Finance Act, 1994 - service tax |
Service tax and penalty |
9,24,210 |
2010-2011 |
Commissioner of central excise |
The Finance Act, 1994 - service tax |
Service tax |
54,70,079 |
2010-2011 to 2014-2015 |
Commissioner of central excise |
The Finance Act, 1994 - service tax |
Service tax |
8,47,328 |
2015-2016 |
Commissioner of central excise |
The Income Tax Act, 1961 |
Income Tax and interest |
58,74,002 |
A.Y. 2011-12 |
CIT(A), Mumbai |
The Income Tax Act, 1961 |
Income Tax and interest |
60,78,40,880 |
A.Y. 2013-14 |
CIT (A), Mumbai |
(viii) According to the information and explanations given to me by the management, and on the basis of records examined by me, the company has defaulted in the repayment of the dues to financial institutions or banks or debenture holders as under:
( Rs.in Crores)
Bank |
Total Overdue 31.03.2016 |
Overdue for more than 90 days |
Overdue for less than 90 days |
Allahabad Bank |
15.01 |
11.39 |
3.62 |
Andhra Bank |
13.20 |
6.30 |
6.90 |
Bank of Baroda |
32.77 |
25.70 |
7.07 |
Bank of India |
25.05 |
18.76 |
6.29 |
Bank of Maharashtra |
8.69 |
4.14 |
4.55 |
IDBI Bank Ltd |
46.88 |
45.03 |
1.85 |
Indian Overseas Bank |
30.73 |
18.68 |
12.05 |
JM Financial ARC co pvt Ltd |
61.65 |
59.64 |
2.01 |
Laxmi Vilas Bank |
4.22 |
2.78 |
1.43 |
LIC of India |
555.68 |
536.62 |
19.06 |
Oriental Bank of Commerce |
18.73 |
17.46 |
1.26 |
Punjab National Bank |
25.21 |
17.56 |
7.65 |
State Bank of India |
91.37 |
91.33 |
0.04 |
Syndicate Bank |
162.16 |
152.84 |
9.32 |
UCO Bank |
323.85 |
311.12 |
12.73 |
United Bank of India |
1.48 |
- |
1.48 |
Vijaya Bank |
1.57 |
0.52 |
1.05 |
JP Morgan Chase |
76.73 |
- |
76.73 |
|
1,494.98 |
1,319.88 |
175.09 |
Note: All the above figures are subject to reconciliation and confirmation.
(ix) The Company did not raise any moneys by way of initial public offer or further public offer (including Debt Instruments) during the period. In my opinion and according to the information and explanations given to me, the term loans taken by the Company have been applied for the purposes for which they were raised.
(x) According to the information and explanations given to me, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of my audit.
(xi) According to the information and explanations given to me and based on my examination of the records, 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 to the Act.
(xii) In my opinion and according to the information and explanations given to me, the Company is not a Nidhi Company.
(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to me, the Company has made private placement of Redeemable cumulative non participating non convertible preference shares during the period and complied with the requirements of section 42 of the Act and the amount raised have been used for the purposes for which the funds were raised.
(xv) According to the information and explanations given to me and based on my examination of the records, the Company has not entered into non-cash transactions with directors or persons connected with him.
(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.
For and on behalf of
For H. S. Hathi & Co.
Chartered Accountants
Firm Regn No. 103596W
Hemant S. Hathi
Proprietor
Mumbai : May 30, 2016 Membership No 037109