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Dr Reddys Laboratories
BSE: 500124|NSE: DRREDDY|ISIN: INE089A01023|SECTOR: Pharmaceuticals
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Mar 12
Auditor's Report (Dr Reddys Laboratories) Year End : Mar '13
Report on the Financial Statements
 
 We have audited the accompanying financial statements of Dr. Reddy''s
 Laboratories Limited (the Company) which comprises the balance sheet
 as at 31 March 2013, the statement of profit and loss and the cash flow
 statement for the year then ended and a summary of significant
 accounting policies and other explanatory information.
 
 Management''s Responsibility for the Financial Statements
 
 Management is responsible for the preparation of these financial
 statements that give a true and fair view of the financial position,
 financial performance and cash flows of the Company in accordance with
 the Accounting Standards referred to in sub-section (3C) of Section 211
 of the Companies Act, 1956 (the Act). This responsibility includes
 the design, implementation and maintenance of internal control 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.
 
 Auditors'' Responsibility
 
 Our responsibility is to express an opinion on these financial
 statements based on our audit. We conducted our audit in accordance
 with the Standards on Auditing issued by the Institute of Chartered
 Accountants of India. Those Standards require that we 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 control relevant to the Company''s preparation and
 fair presentation of the financial statements 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 Management, as
 well as evaluating the overall presentation of the financial
 statements.
 
 We believe that the audit evidence we have obtained is sufficient 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 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:
 
 (a) in the case of the balance sheet, of the state of affairs of the
 Company as at 31 March 2013;
 
 (b) in the case of the statement of profit and loss, of the profit for
 the year ended on that date; and
 
 (c) in the case of the cash flow statement, of the cash flows for the
 year ended on that date.
 
 Report on Other Legal and Regulatory Requirements
 
 1.  As required by the Companies (Auditors'' Report) Order, 2003 (the
 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 specified in paragraphs 4 and 5 of the
 Order.
 
 2.  As required 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 required 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 profit and loss and the cash
 flow statement dealt with by this report are in agreement with the
 books of account;
 
 (d) in our opinion, the balance sheet, the statement of profit and loss
 and the cash flow 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 2013, and taken on record by the Board of Directors,
 none of the director is disqualified as on 31 March 2013, 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 (the Company) for the year
 ended 31 March 2013.  We report that:
 
 i.  (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 The Company has a regular programme of physical verification of its
 fixed assets by which all fixed assets are verified in a phased manner
 over a period of 3 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. No material discrepancies were noticed on
 such verification.
 
 (b) 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 verified by the management 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 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. No material
 discrepancies were noticed on verification between the physical stocks
 and the book records.
 
 iii. (a) The Company has granted loans to ten subsidiary companies (of
 which 4 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 '' 6,254 millions and the year-end
 balance of such loans was '' 5,549 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 '' 1 lakh in respect of
 loans granted to any of the companies, firms 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, firms 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 quotations, 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
 fixed assets and with regard to the sale of goods and services. We have
 not observed any major 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
 '' 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 quotations. 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.  We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules prescribed by the Central Government for
 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,
 Wealth 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, Wealth tax, Service tax, Customs duty, Excise duty and other
 material statutory dues were in arrears as at 31 March 2013 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 - I 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
 financial year and has not incurred cash losses during the financial
 year and in the immediately preceding financial 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 financial institutions or to debenture holders.
 
 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 financial
 institutions are not prejudicial to the interests of the Company.
 
 xvi. In our opinion and according to the information and explanations
 given to us, the Company did not have any term loans during the year.
 
 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 no funds raised on short-term basis have been used for
 long term investment.
 
 xviii.  The Company has not made any preferential allotment of shares
 to companies, firms 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 High Court of Andhra Pradesh, India. Accordingly, no
 security or charge in respect of such debentures has been created.
 
 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.
 
 Chartered Accountants
 
 Firm Registration No.: 101248W
 
 Natrajh Ramakrishna
 
 Partner
 
 Membership No.: 032815
 
 Place : Hyderabad
 
 Date : 14 May 2013
Source : Dion Global Solutions Limited
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