We have audited the accompanying standalone financial statements of Shilpa Medicare Limited (“the company”), which comprise the standalone Balance Sheet as at March 31, 2024, the standalone Statement of Profit and Loss (including other comprehensive income), the standalone Statement of Changes in Equity and the standalone Statement of Cash Flows for the year ended on that date, and a summary of the significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the accompanying standalone financial statements give the information required by the Companies Act, 2013 (“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, 2024, and its profits and other comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditors responsibility for the Audit of Standalone Financial Statements section of our report. We are independent of the company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical
requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. 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.
Emphasis of Matter
We draw your attention to note no 52 in respect of unfavourable foreign arbitration award dated 22.01.2024 to Celltrion Inc, of Rs.3,659.10 lakhs towards breach of contract along with legal cost and interest calculated upto the year end date, which the company is proposing to challenge at the execution stage based on the legal advice. Hence the management is of the view that no provision is required as of now in respect of this matter in the Financial Statements.
Our opinion in not modified in respect of this matter.
Key Audit Matters
Key Audit matters are those matters that in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
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Key Audit Matters
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How the matter was addressed in our audit
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Revenue from sale of products and services
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Principal audit procedures
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Refer to Note 1.1 (L) of the summary of significant accounting
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Our audit procedures included the following:
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policies to the standalone Ind AS financial statements.
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• We evaluated the Company's accounting policies
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Revenue is recognised when the entity has transferred the
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related to revenue recognition and assessed its
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control for the promised goods or Services or on completion of
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compliance in terms of Ind-AS 115 ‘Revenue from
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performance obligation. The Company has a large number of
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contracts with customers';
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customers operating in various geographies and sale contracts
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• We performed a walkthrough, evaluated the design
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with customers have different terms relating to the recognition
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and tested the operating effectiveness of controls
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of revenue. Terms of sales arrangement, including the timing of transfer of control, Inco terms and identification of
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related to the revenue recognition process;
• For revenue from sale of products, we selected samples
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Performance obligations in case of service contracts require
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(including year-end testing of cut-off transactions) and
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significant judgement in determining revenue.
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tested the underlying documents, including customer
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We identified the recognition of revenue from sale of products
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contracts, invoices and shipping documents to assess
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and services as a key audit matter as revenue is a key
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and analyze the timing of recognition of revenue
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performance indicator and there could be a risk that revenue
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and contractual terms; Performed trend analysis over
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is recognised in the incorrect period.
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revenue as compared to previous periods.
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Key Audit Matters
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How the matter was addressed in our audit
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• Assessing journal entries posted to revenue to identify unusual items not already covered by our audit testing.
• For revenue from sale of services, we selected samples and tested underlying documents and read, analysed the distinct performance obligations in these contracts.
• We assessed the disclosures in accordance with Ind AS 115“Revenue from contracts with customers”
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Assessment of carrying value of Investment and Loans
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Principal audit procedures
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to Subsidiaries, Associates and Joint Ventures
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Our audit procedures include the following
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The Company has investments of Rs. 24,643.05 Lakhs in
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substantive procedures:
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equity and preference shares in subsidiaries, associates and
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• Obtained an understanding of management's
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joint ventures as at March 31, 2024. Further the Company
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process and evaluated design and tested operating
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has granted loans having a carrying value of Rs. 94,689.37
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effectiveness of controls around identification of
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lakhs as at March 31, 2024.
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indicators of impairment under Ind AS, and around
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The carrying value of investments in and loans to
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valuation of the business to determine recoverable
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subsidiaries, associates and joint ventures will be recovered
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value of the said investment.
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through future cash flows and there is inherent risk that
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• Assessed the appropriateness of methodology and
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these assets will be impaired if these cash flows do not
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valuation model used by the management to estimate
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meet the Company's expectations.
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the recoverable value of investments.
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Refer to note 1.1 (d) in the Standalone Financial Statements
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• Assessed cash flow forecasts to ensure consistency with
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for details of accounting policies on impairment of assets
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current operations of the Company and performed
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and related disclosures.
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sensitivity analysis on key assumptions used in
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Valuation of investment in and loans to subsidiaries,
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management's calculated recoverable value
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associates and joint ventures is a key audit matter due to:
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• Assessed the reasonableness of assumptions relating to
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• The inherent complexity in auditing the forward-looking
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• revenue growth rate, gross margins, discount rates
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assumptions applied to recoverable value given the
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etc. based on historical results, current developments
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significant judgements involved. The key assumptions
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and future plans of the business estimated by
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in the cash flow models include the forecast revenue,
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management using expertise of our valuation specialist
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margins, terminal growth and discount rates.
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on required parameters.
• • Performed sensitivity analysis of the key assumptions, including future revenue growth rates, future gross margins, and the discount rate applied in the recoverable value and considering the resulting impact on the impairment testing and whether selection of these key assumptions is appropriate.
• Based on our procedures, we also considered the adequacy of disclosures in respect of investment in and loans to the said subsidiaries, associates andjoint venture in the notes to the standalone financial statements.
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Minimum Alternate Tax (MAT) Credit Entitlement -
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Principal audit procedures
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Deferred tax assets
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In respect of such deferred tax assets, we assessed
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The Company pays minimum alternate tax (MAT) under
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recoverability from a tax perspective by performing the
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section 115JB of the Income Tax Act, 1961. The MAT paid
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following procedures:
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would be available as an offset over a period of 15 years.
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• Evaluating the design, implementation and operating
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The MAT credit is recognized as a deferred tax asset to be
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effectiveness of the relevant internal controls over
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available for offset when the Company pays taxes under
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recognition and measurement of MAT credit assets.
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the provision of Income Tax Act, 1961. The balance of MAT credit receivable as at March 31, 2024 is Rs.7,600.12 Lakhs
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• UnderstandingwhytheMATcredit entitlementarose and
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(refer note 1.1(q) to the standalone financial statements).
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• whether the MAT credit entitlement can be utilized.
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The recognition and recoverability of deferred tax asset
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• Assessedthe sensitivity analysis applied bythe Company
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on account of MAT credit requires significant judgement
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and evaluated if any change in the assumptions will
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regarding the Company's future profitability and taxable
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lead to any material change in carrying amount.
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income which will result in utilization of the MAT credit
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• assessing any restriction in use of the MAT credit
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within the time limits available under the applicable Income tax laws.
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entitlement and
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Key Audit Matters
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How the matter was addressed in our audit
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Further, we assessed the applicability of Ind AS 12 Income Taxes by assessing management's assessment of recoverability of MAT credit entitlement against forecast income streams, including reliability of future income projections.
We validated the appropriateness of the related disclosures in the standalone financial statements.
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Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Board's Report including Annexures to Board's Report, Business Responsibility and Sustainability Report, Corporate Governance and Shareholder's Information, but does not include the standalone financial statements and our auditor's report thereon, and the remaining sections of the Company's Annual Report, which are expected to be made available to us after that date.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the other sections of the Annual Report (other than those mentioned above), if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take necessary actions, as applicable under the applicable laws and regulations.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position,
financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules issued there under and other accounting principles generally accepted in India. 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 the frauds and other irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, the Board of Directors is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reporting process of each Company.
Auditor's Responsibility for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management and Board of Directors.
• Conclude on the appropriateness of the Management and Board of Directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance of the company regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1) As required by the Companies (Auditor's Report) Order,2020 (“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 the paragraph 3 and 4 of the Order, to the extent applicable.
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 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 it appears from our examination of those books except for the matters stated in paragraph 2(vi) below on reporting under Rule 11(g).
c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income,
Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.
d) In our opinion, the aforesaid financial statements comply with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act.
e) On the basis of written representations received from the directors as on March 31, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2024 from being appointed as a director in terms of Section 164(2) of the Act.
f) With respect to the adequacy of internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”.
g) With respect to the other matters to be included in the Auditor's Report in accordance with the requirement of Section 197(16) of the Act, as amended, in our opinion and according to the information and explanations given to us, remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act.
h) 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 standalone financial statements.
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, 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.
iv. (a) The Management has represented
that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under subclause (a) and (b) above, contain any material misstatement.
v. During the year no dividend is declared or paid by the company.
vi. Based on our examination, which included test checks, and relying on the representations / explanations from the Company, the Company has used accounting softwares for maintaining its books of account for the financial year ended March 31,2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all the relevant transactions recorded in the software except for the Payroll related data for which audit trail (edit log) facility was not enabled throughout the year. Further, during the course of our audit we did not come across any instance of the
audit trail feature being tampered with in respect of accounting software.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended March 31, 2024.
for Bohara Bhandari Bung And Associates LLP.
Chartered Accountants Firm's Regn No. 0008127S/S200013
CA. Yogesh R Bung
Partner
Place : Mumbai Membership No. 143932
Date : 23.05.2024 UDIN : 24143932BKAEOF4272
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