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Dr Reddys Laboratories
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« Mar 13
Auditor's Report (Dr Reddys Laboratories) Year End : Mar '14
Report on the Financial Statements
 
 We have audited the accompanying nancial statements of Dr. Reddy''s
 Laboratories Limited (''the Company'') which comprises the balance sheet
 as at 31 March 2014, the statement of pro t and loss and the cash ow
 statement for the year then ended and a summary of signi cant
 accounting policies and other explanatory information.
 
 Management''s Responsibility for the Financial Statements
 
 Management is responsible for the preparation of these nancial
 statements that give a true and fair view of the nancial position,
 nancial performance and cash ows of the Company in accordance with the
 Accounting Standards referred to in sub-section (3C) of Section 211 of
 the Companies Act, 1956 (t he Act). This responsibility includes the
 design, implementation and maintenance of internal control relevant to
 the preparation and presentation of the nancial statements that give a
 true and fair view and are free from material misstatement, whether due
 to fraud or error
 
 Auditors’ Responsibility
 
 Our responsibility is to express an opinion on these nancial statements
 based on our audit. B e conducted our audit in accordance with the
 Standards on Auditing issued by the Institute of Chartered Accountants
 of India. Those Standards reBuire that we comply with ethical
 requirements and plan and perform the audit to obtain reasonable
 assurance about whether the nancial statements are free from material
 misstatement.
 
 An audit involves performing procedures to obtain audit evidence about
 the amounts and disclosures in the nancial statements. The procedures
 selected depend on the auditor’s Budgment, including the assessment of
 the risks of material misstatement of the nancial statements, whether
 due to fraud or error. In making those risk assessments, the auditor
 considers internal control relevant to the Company’s preparation and
 fair presentation of the nancial statements in order to design audit
 procedures that are appropriate in the circumstances, but not for the
 purpose of expressing an opinion on the effectiveness of the entity’s
 internal control. An audit also includes evaluating the appropriateness
 of accounting policies used and the reasonableness of the accounting
 estimates made by management, as well as evaluating the overall
 presentation of the nancial statements.
 
 B e believe that the audit evidence we have obtained is suf cient and
 appropriate to provide a basis for our audit opinion
 
 Opinion
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the nancial statements give the information
 reBuired by the Act in the manner so reBuired and give a true and fair
 view in conformity with the accounting principles generally accepted in
 India:
 
 (i) in the case of the balance sheet, of the state of affairs of the
 Company as at 31 March 2014;
 
 (ii) in the case of the statement of pro t and loss, of the pro t for
 the year ended on that date; and
 
 (iii) in the case of the cash ow statement, of the cash ows for the
 year ended on that date.
 
 Report on Other Legal and Regulatory Requirements
 
 1.  As reBuired by the Companies (Auditor’s Report) Order, 2003 (t he
 Order), as amended, issued by the Central Government of India in terms
 of sub-section (4A) of Section 227 of the Act, we give in the Annexure
 a statement on the matters speci ed in paragraphs 4 and 5 of the Order
 
 2.  As reBuired by Section 227(3) of the Act, we report that:
 
 (a) we have 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 reBuired by law have been
 kept by the Company so far as appears from our examination of those
 books;
 
 (c) the balance sheet, the statement of pro t and loss and the cash ow
 statement dealt with by this Report are in agreement with the books of
 account;
 
 (d) in our opinion, the balance sheet, the statement of pro t and loss
 and the cash ow statement comply with the Accounting Standards referred
 to in sub-section (3C) of Section 211 of the Companies Act, 1956, to
 the extent applicable; and
 
 (e) on the basis of written representations received from the directors
 as on 31 March 2014, and taken on record by the Board of Directors,
 none of the directors is disBuali ed as on 31 March 2014, from being
 appointed as a director in terms of clause (g) of sub-section (1) of
 Section 274 of the Companies Act, 1956.
 
 -The Annexure referred to in the auditors’ report to the members of Dr.
 Reddy’s Laboratories Limited (t he Company) for the year ended 31 March
 2014.  We report that:
 
 (a) The Company has maintained proper records showing full particulars,
 including Buantitative details and situation of xed assets.
 
 (b) The Company has a regular programme of physical veri cation of its
 xed assets by which all xed assets are veri ed in a phased manner over
 a period of 3 years In our opinion, this periodicity of physical veri
 cation is reasonable having regard to the size of the Company and the
 nature of its assets. No material discrepancies were noticed on such
 veri cation
 
 (c) Fixed assets disposed off during the year were not substantial and
 therefore do not affect the going concern assumption
 
 ii. (a) Inventories, except goods-in-transit and stocks lying with
 third parties have been physically veri ed by the management during the
 year. In our opinion, the frequency of such veri cation is reasonable.
 For stocks lying with third parties at the year-end, written con
 rmations have been obtained
 
 (b) In our opinion, the procedures of physical veri cation of
 inventories followed by the management are reasonable and adequate in
 relation to the size of the Company and the nature of its business.
 
 (c) The Company is maintaining proper records of inventory. The
 discrepancies noticed on veri cation between the physical stocks and
 the book records were not material.
 
 iii. (a) The Company has granted loans to nine subsidiary companies (of
 which 5 loans are interest free) covered in the register maintained
 under Section 301 of the Companies Act, 1956. The maximum amount
 outstanding during the year was Rs. 6,142 millions and the year-end
 balance of such loans was Rs. 4,856 millions.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 on which loans have been granted to companies listed in the register
 maintained under Section 301 of the Companies Act, 1956 are not, prima
 facie, prejudicial to the interest of the Company.
 
 (c) In the case of loans granted to the companies listed in the
 register maintained under Section 301, where stipulations have been
 made, the borrowers have been regular in repaying the principal amounts
 as stipulated and in the payment of interest, wherever applicable.
 
 (d) There is no overdue amount of more than Rs. one lakh in respect of
 loans granted to any of the companies, rms or other parties listed in
 the register maintained under Section 301 of the Companies Act, 1956.
 
 (e) The Company has not taken loans secured or unsecured from any
 companies, rms and other parties covered in the register maintained
 under Section 301 of the Companies Act, 1956.
 
 iv. In our opinion and according to the information and explanations
 given to us, and having regard to the explanation that purchases of
 certain items of inventories are for the Company’s specialized
 requirements and similarly certain goods sold are for the specialized
 requirements of the buyers and suitable alternative sources are not
 available to obtain comparable Buotations, there is an adequate
 internal control system commensurate with the size of the Company and
 the nature of its business with regard to purchase of inventories and
 xed assets and with regard to the sale of goods and services. H e have
 not observed any maHor weakness in the internal control system during
 the course of the audit.
 
 v. (a) In our opinion and according to the information and explanations
 given to us, the particulars of contracts or arrangements referred to
 in Section 301 of the Companies Act, 1956 have been entered in the
 register required to be maintained under that section
 
 (b) In our opinion, and according to the information and explanations
 given to us, the transactions made in pursuance of contracts and
 arrangements referred to in point (a) above and exceeding the value of
 Rs. 5 lakh with any party during the year, have been made at prices which
 are reasonable having regard to the prevailing market prices at the
 relevant time except for the purchases of certain items of inventories
 which are for Company’s specialized requirements and similarly for sale
 of certain goods for the specialized requirements of the buyers and for
 which suitable alternative sources are not available to obtain
 comparable Buotations. However on the basis of information and
 explanations provided, the same appear reasonable.
 
 vi. In our opinion, and according to the information and explanations
 given to us, the Company has complied with the provisions of Section
 58A, Section 58AA or other relevant provisions of the Companies Act,
 1956 and the rules framed there under/the directives issued by the
 Reserve Bank of India (as applicable) with regard to deposits accepted
 from the public. Accordingly, there have been no proceedings before the
 Company Law Board or National Company Law Tribunal (as applicable) or
 Reserve Bank of India or any Court or any other Tribunal in this matter
 and no order has been passed by any of the aforesaid authorities.
 
 vii.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 viii. H e have broadly reviewed the books of account maintained by the
 Company pursuant to the rules prescribed by the Central Government for
 the maintenance of cost records under Section 209 (1) (d) of the
 Companies Act, 1956, 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 the records.
 
 ix. (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, Investor Education and
 Protection Fund, Employees’ State Insurance, Income tax, Sales tax, H
 ealth tax, Service tax, Customs duty, Excise duty and other material
 statutory dues have been generally regularly deposited during the year
 by the Company with the appropriate authorities.
 
 -(b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Investor
 Education and Protection Fund Employees’ State Insurance, Income tax,
 Sales tax, H ealth tax, Service tax, Customs duty, Excise duty and
 other material statutory dues were in arrears as at 31 March 2014 for a
 period of more than six months from the date they became payable.
 
 (c) According to the information and explanations given to us, the dues
 set out in Appendix - 1 in respect of Income tax, Sales tax, Service
 tax, Customs duty and Excise duty have not been deposited with the
 appropriate authorities on account of disputes.
 
 x. The Company does not have any accumulated losses at the end of the
 nancial year and has not incurred cash losses during the nancial year
 and in the immediately preceding nancial year
 
 xi. In our opinion and according to the information and explanations
 given to us, the Company, has not defaulted in repayment of dues to its
 bankers or to any nancial institutions, or to debenture holders during
 the year
 
 xii.  The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 xiii.  In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund/nidhi/mutual fund/society
 
 xiv. According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments. Accordingly clause 4(xiv) of the Order is not
 applicable.
 
 xv. In our opinion and according to the information and explanations
 given to us, the terms and conditions on which the Company has given
 guarantees for loans taken by others from banks or nancial institutions
 are not preHudicial to the interests of the Company.
 
 xvi. In our opinion and according to the information and explanations
 given to us by the management, term loans availed by the Company were
 applied for the purposes for which the loans were obtained, other than
 for temporary deployment of funds pending application.
 
 xvii. According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we are of
 the opinion that funds raised on short-term basis have not been used
 for long term investment.
 
 xviii. The Company has not made any preferential allotment of shares to
 companies, rms or parties covered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 xix. During the year ended 31 March 2011, the Company had issued
 unsecured debentures in accordance with the scheme of arrangement
 approved by the B igh Court of Andhra Pradesh, India. No security or
 charge in respect of such debentures was created. During the year ended
 31 March 2014, the Company has redeemed all of such unsecured
 debentures at par value aggregating to Rs. 5,078 million as per the terms
 of the aforesaid scheme.
 
 xx.  During the year, the Company has not raised any money through
 public issue.
 
 xxi.  According to the information and explanations given to us, no
 material fraud on or by the Company has been noticed or reported during
 the course of our audit.
 
                                               for B S R & Co LLP.
 
                                            Chartered Accountants
 
                                    Firm registration No: 101248B
 
                                                  Supreet Sachdev
 
                                                          Partner
 
                                            Membership No: 205385
 
 Place : Hyderabad 
 
 Date : 13 May 2014
Source : Dion Global Solutions Limited
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