Good Health Can’t Wait.

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Good Health Can’t Wait. Dr. Reddy’s Laboratories Limited ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS As stated in Para 1 ‘Report on Other Legal and Regulatory Requirements’ in our Auditors’ report of even date, the following statement is based on the comments in the Auditors’ reports on the standalone financial statements of the Holding Company, subsidiary companies and jointly controlled company incorporated in India. i. (a) The Holding Company, subsidiary companies and jointly controlled company incorporated in India has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) The Holding Company, subsidiary companies and jointly controlled company incorporated in India has a regular programme of physical verification of its fixed assets by which all the fixed assets are verified in a phased manner over a period of 3 years. In our opinion, the periodicity of physical verification is reasonable having regard to the size of the Holding Company, subsidiary companies and jointly controlled company incorporated in India and the nature of its assets. No material discrepancies were noticed on such verification. ii. (a) Inventories, except goods-in-transit and stocks lying with third parties have been physically verified by the respective management of the Holding Company, subsidiary companies and jointly controlled company incorporated in India during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained. (b) In our opinion, the procedures of physical verification of inventories followed by the management as referred to above are reasonable and adequate in relation to the size of the respective Company and the nature of its business. (c) The Holding Company, subsidiary companies and jointly controlled company incorporated in India are maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material. iii. (a) The Holding Company has granted unsecured loans to seven subsidiary companies covered in the register maintained under Section 189 of the Companies Act, 2013 (“the Act”). The subsidiary company incorporated in India has granted unsecured interest free loans to two body corporates covered in the register maintained under section 189 of the Companies Act, 2013. The jointly controlled company incorporated in India has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained by it under section 189 of the Act. (b) In the case of the loans granted by the Holding Company to the companies listed in the register maintained under Section 189 of the Act, the borrowers have been regular in repaying the principal amounts as stipulated and in the payment of interest, wherever applicable. In respect of the loans granted by the subsidiary company to the body corporates covered in the register maintained under Section 189 of the Act, the terms of the arrangement do not stipulate any repayment schedule and the loans were repayable on demand. During the year, entire amount of loan has been repaid by the borrower and accordingly paragraph 3(iii)(b) is not applicable to the subsidiary company. (c) There are no overdue amounts of more than rupees one lakh in respect of the loans granted to any of the companies, firms and other parties covered in the register maintained under section 189 of the Act. iv. In our opinion and according to the information and explanations obtained by the statutory auditors of the Holding Company, subsidiary companies and jointly controlled company incorporated in India, and having regard to the explanation that purchases of certain items of inventories are for the Holding Company’s specialized requirements, certain goods sold in the Holding Company are for the specialized requirements of the buyers, sale of certain services in Subsidiary Company are for the specialized requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the each Company and the nature of its business with regard to purchase of inventories, fixed assets and sale of goods and services. The activities of the subsidiary companies and jointly controlled company incorporated in India did not involve sale of goods. We have not observed any major weakness in the internal control system during the course of the audit. v. The Holding Company, subsidiary companies and jointly controlled company incorporated in India has not accepted any deposits from the public. vi. The statutory auditors of the Holding Company have broadly reviewed the books of account maintained by the Holding Company pursuant to the rules prescribed by the Central Government for the maintenance of cost records under Section 148 (1) of the Act, and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, the statutory auditors of the Holding Company have not made a detailed examination of the records. For subsidiary companies and jointly controlled company incorporated in India, the Central Government has not prescribed the maintenance of cost records under sub-section 1 of Section 148 of the Companies Act, 2013, for any of its services rendered. vii. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Holding Company, subsidiary companies and jointly controlled company incorporated in India, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including provident fund, employees’ state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues have been generally regularly deposited during the year by the Company 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, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues were in arrears as at 31 March 2015 for a period of more than six months from the date they became payable. 166
Consolidated Financial Statements Annual Report 2014 - 15 ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (b) According to the information and explanations given to the statutory auditors of the Holding Company, subsidiary companies and jointly controlled company incorporated in India, the dues set out in Appendix - 1 in respect of income tax, sales tax, service tax, duty of customs, duty of excise and value added tax have not been deposited with the appropriate authorities on account of disputes. (c) According to the information and explanations given to and on the basis of the examination by the statutory auditors of the records of the Holding Company, subsidiary companies and jointly controlled company incorporated in India, the amounts required to be transferred by the Holding Company to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time. The subsidiary companies and jointly controlled company incorporated in India did not have any dues on account of Investor Education and Protection Fund. viii. The Holding Company, subsidiary companies and jointly controlled company incorporated in India does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year. ix. In their opinion and according to the information and explanations given to the statutory auditors of the Holding Company, the Holding Company has not defaulted in repayment of dues to its bankers or to any financial institutions, or to debenture holders during the year. The subsidiary companies and jointly controlled company incorporated in India did not have any dues to banks, financial institutions or debenture holders during the year. x. According to the information and explanations given to the statutory auditors of the Holding Company, the terms and conditions on which the Holding Company has given guarantees for loans taken by others from banks or financial institutions is not prejudicial to its interests. The subsidiary companies and jointly controlled company incorporated in India have not given any guarantees for loans taken by others from banks or financial institutions. xi. In their opinion and according to the information and explanations given to the statutory auditors of the Holding Company, term loans availed by the Holding Company were applied for the purposes for which the loans were obtained. The subsidiary companies and jointly controlled company incorporated in India did not have any term loans outstanding during the year. xii. According to the information and explanations given to the statutory auditors of the Holding Company, subsidiary companies and jointly controlled company incorporated in India, no instances of material fraud on or by each company has been noticed or reported during the course of audit by the statutory auditors of the Holding Company, subsidiary companies and jointly controlled company incorporated in India. for B S R & Co. LLP Chartered Accountants Firm Registration No.: 101248W/W-100022 Supreet Sachdev Partner Membership No.: 205385 Place : Hyderabad Date : 12 May 2015 167
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Dr. Reddy’s Laboratories Limited
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The future belongs, not to those wh
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