FUTURE BIOCON Auditors Report

To the Members of Biocon Limited


Report on the Standalone Indian Accounting Standards (''''Ind AS'''') Financial Statements


We have audited the accompanying standalone Ind AS financial statements of Biocon Limited (''''the Company''''), which comprise the balance sheet as at 31March 2017, the statement of profit and Loss (including other comprehensive income), the statement of cash flows and the statement of changes in equity for the year then ended and a summary of the significant accounting policies and other explanatory information (herein after referred to as “standalone Ind AS financial statements”).


Management''''s Responsibility for the Standalone Ind AS 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 standalone Ind AS 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 accounting principles generally accepted in India, including the Ind AS prescribed under Section 133 of the Act read with relevant rules issued there under


This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 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 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 there under


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 the 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 the 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 Ind AS 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, including the Ind AS, of the financial position of the Company as at 31 March 2017, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.


Other matters


The comparative financial information of the Company for the year ended 31 March 2016 and the transition date opening balance sheet as at 1 April 2015 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 auditor whose report for the year ended 31 March 2016 and 31 March 2015 dated 26 April 2016 and 29 April 2015 respectively expressed an unmodified opinion on those standalone financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by us.


Our opinion is not modified in respect of this matter.


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 Section 143(11) of the Act, we give in “Annexure A” a statement on the matters specified in the paragraph 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 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;


(c) the balance sheet, the statement of profit and Loss, the statement of cash flows and 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 Indian Accounting Standards specified under Section 133 of the Act read with relevant rules issued there under;


(e) o n the basis of the written representations received from the directors as on 31 March 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2017 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 standalone Ind AS financial statements. Refer note 36 to the standalone Ind AS financial statements;


ii. provision has been made in the financial statements, as required under the applicable Law or accounting standards, for the material foreseeable Losses, if any, on Long-term contracts including derivative contracts. Refer note 39 to the standalone Ind AS financial statements;


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


iv. the Company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November 2016 to 30 December 2016. Based on audit procedures and relying on the management representation we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management. Refer note 37 to the standalone Ind AS financial statements.


Annexure - A to the Independent Auditor''''s Report


The Annexure referred to in Independent Auditors'''' Report to the members of the Company on the standalone Ind AS financial statements of Biocon Limited for the year ended 31 March 2017. We report that:


(i) (a) T he Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.


(b) T he Company has a regular programme of physical verification of its property, plant and equipment by which all property, plant and equipment are verified in a phased manner over a period of three years. In our 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 property, plant and equipment were verified during the year and no material discrepancies were noticed on such verification.


(c) According to the information and explanations given to us and basis our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company except for one immovable property amounting to Rs. 35 million as at 31 March 2017 for which the Company is in the process of obtaining registration.


(ii) Inventories apart from goods in transit and inventories Lying with outside parties have been physically verified by the Management during the year and the discrepancies noticed on such verification between the physical stock and book records were not material. In our opinion, the frequency of such verification is reasonable. Inventories Lying with outside parties has been substantially confirmed by them as at the year-end and no material discrepancies were noticed in respect of such confirmations.


(iii) The Company has granted Loan to a Company covered in the register maintained under Section 189 of the Companies Act, 2013 (''''the Act'''').


(a) I n our opinion, the rate of interest and other terms and conditions on which the Loan had been granted to the company Listed in the register maintained under Section 189 of the Act was not, prima facie, prejudicial to the interest of the Company.


(b) I n the case of the Loan granted covered in the register maintained under Section 189 of the Act, the borrower has been reguLar in the payment of the principal and interest as stipulated.


(c) There are no overdue amounts in respect of the Loan granted to a company covered in the register maintained under Section 189 of the Act.


(iv) I n 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, with respect to the Loans given, investments made and, guarantees and securities given.


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


(vi) We have broadly reviewed the books of accounts maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 as amended, prescribed by the Central Government under Section 148 of the Act and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However we have not made a detailed examination of such records.


(vii) (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, employees’ state insurance, income-tax, sales tax, value added tax, duty of customs, excise duty, service tax, cess and other material statutory dues have been regularly deposited during the year with the appropriate authorities.


According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state insurance, income tax, sales tax, value added tax, duty of customs, excise duty, service tax, cess and other material statutory dues were in arrears as at 31 March 2017 for a period of more than six months from the date they became payable.


(b) According to the information and explanations given to us, there are no dues of income tax, sales tax, value added tax, service tax, duty of customs, duty of excise which have not been deposited with the appropriate authorities on account of any disputes other than the following dues:






























































Name of the statute



Nature of dues



Amount disputed (Rs. in millions)



Amount paid under protest (Rs. in millions)



Period to which the amount relates



Forum where dispute is pending



Income-tax Act, 1961



Income Tax



4



4



1996-97



Supreme Court



Income-tax Act, 1961



Income Tax



1,207



111



2009-10, 2012-13 & 2013-14



Commissioner (Appeals)



Income-tax Act, 1961



Income Tax



1,053



117



2008-09, 2010-11, & 2011-12



Income Tax Appellate Tribunal ("ITAT")



Income-tax Act, 1961



Income Tax



4



4



1997-98



High Court



Finance Act, 1994



Service Tax



54



March 2010,


April 2009 to March 2013. March 2009 to December 2011, July 2009 to March 2013



Commissioner (Appeals)



Finance Act, 1994



Service Tax



91



May 2006 to September 2010, October 2010 to March 2011, March 2006 to March 2010. 2007-08



Customs, Excise and Service Tax Appellate Tribunal ("CESTAT")








































































Finance Act, 1994



Service Tax



1



-



January 2009 to May 2012, June 2010 to June 2012



Additional Commissioner



Finance Act, 1994



Service Tax



11



-



April 2014 to March 2015



Principal Commissioner, LTU



Value added tax Act, 2005



Value Added Tax



1



-



2006-07



Commissioner (Appeals)



The Central Excise Act, 1944



Excise Duty



361



53



April 2005 to March 2008 2006-07 to 2008-09 2009-10 to 2012-13



CESTAT



The Central Excise Act, 1944



Excise Duty



1



-



2009-10 to 2012-13



Commissioner (Appeals)



The Central Excise Act, 1944



Excise Duty



15



2007-08 to 2011-12 September 2013 to October 2013



Commissioner (Appeals)



The Customs Act, 1962



Customs Duty



4



3



1994 till 2008



CESTAT



The Customs Act, 1962



Customs Duty



4



4



2005 till 2011



Commissioner (Appeals)



(viii) I n our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks, financial institutions or government. The Company did not have any borrowings during the year by way of debentures.


(ix) According to the information and explanations given to us, the Company has not raised any money by way of public issue or further public offer (including debt instruments) during the year. The term Loans raised by the Company have been applied for the purpose for which they were raised.


(x) According to the information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.


(xi) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid/ provided for managerial remuneration in accordance with the requisite approvals as per provisions of Section 197 read with Schedule V to the Act.


(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company.


(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 standalone Ind AS financial statements, as required by the applicable accounting standards.


(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly para 3 (xiv) of the Order is not applicable.


(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.


(xvi) According to the information and explanations given to us, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.


Annexure - B to the Independent Auditor''''s Report of even date on the standalone financial statements of Biocon Limited


Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)


We have audited the internal financial controls over financial reporting of Biocon Limited (''''the Company''''), as of 31 March 2017 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 (''''Guidance Note'''') issued by the Institute of Chartered Accountants of India (''''ICAI''''). 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 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.


Auditors'''' 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, issued by ICAI and deemed to be prescribed 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 judgment, 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 Company''''s 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 Ind AS 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 31 March 2017, 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 B S R & Co. LLP


Chartered Accountants


Firm registration number: 101248W/W-100022


S Sethuraman


Partner


Membership number: 203491


Place: Bangalore


Date: 27 April 2017


CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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