AUDITORSTO THE MEMBERS OF GLAXOSMITHKLINE PHARMACEUTICALS LIMITED
1. We have audited the attached Balance Sheet of GlaxoSmithKline PharmaceuticalsLimited (the “Company”) as at 31st December, 2012, and therelated Statement of Profit and Loss and Cash Flow Statement for the year ended on thatdate annexed thereto, which we have signed under reference to this report. These financialstatements are the responsibility of the Company’s Management. Our responsibility isto express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally acceptedin India. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by Management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by theCompanies (Auditor’s Report) (Amendment) Order, 2004 (together the“Order”), issued by the Central Government of India in terms of sub-section (4A)of Section 227 of ‘The Companies Act, 1956’ of India (the ‘Act’) andon the basis of such checks of the books and records of the Company as we consideredappropriate and according to the information and explanations given to us, we give in theAnnexure a statement on the matters specified in paragraphs 4 and 5 of the Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we reportthat:
(a) We have obtained all the information and explanations which, to the best of ourknowledge 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 theCompany so far as appears from our examination of those books;
(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt withby this report are in agreement with the books of account;
(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash FlowStatement dealt with by this report comply with the accounting standards referred to insub-section (3C) of Section 211 of the Act;
(e) On the basis of written representations received from the directors, as on 31stDecember, 2012 and taken on record by the Board of Directors, none of the directors isdisqualified as on 31st December, 2012 from being appointed as a director interms of clause (g) of sub-section (1) of Section 274 of the Act;
(f) In our opinion and to the best of our information and according to the explanationsgiven to us, the said financial statements together with the notes thereon and attachedthereto give, in the prescribed manner, the information required by the Act, and give atrue and fair view in conformity with the accounting principles generally accepted inIndia:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31stDecember, 2012;
(ii) in the case of the Statement of Profit and Loss, of the profit for the year endedon that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended onthat date.
| For Price Waterhouse & Co., Bangalore |
| Firm Registration Number : 007567S |
| Chartered Accountants |
| Asha Ramanathan |
| Partner |
| Mumbai, 19th February, 2013 | Membership Number: 202660 |
Annexure To Auditors’ Report
[Referred to in paragraph 3 of the Auditors’ Report of even date to the members ofGlaxoSmithKline Pharmaceuticals Limited on the financial statements for the year ended 31stDecember, 2012]
1. (a) The Company is maintaining proper records showing full particulars, includingquantitative details and situation of fixed assets, other than the situation of certainplant and equipment, furniture and office equipment, for which the situation recorded, isthe location of the Company’s different establishments.
(b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of three years which, in ouropinion, is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme, a portion of the fixed assets has been physicallyverified by the Management during the year and no material discrepancies have been noticedon such verification.
(c) In our opinion, and according to the information and explanations given to us, asubstantial part of fixed assets has not been disposed off by the Company during the year.
2. (a) The inventory excluding materials in transit has been physically verified by theManagement during the year. Further a major portion of inventory lying with third partieshas been physically verified by the Management during the year. In our opinion, thefrequency of verification is reasonable.
(b) In our opinion, the procedures of physical verification of inventory followed bythe management are reasonable and adequate in relation to the size of the Company and thenature of its business.
(c) On the basis of our examination of the inventory records, in our opinion, theCompany is maintaining proper records of inventory. In our opinion, the discrepanciesnoticed on physical verification of inventory as compared to book records were notmaterial.
3. (a) The Company has not granted any loans, secured or unsecured, to companies, firmsor other parties covered in the register maintained under Section 301 of the Act.Therefore, the provisions of clauses 4(iii)(b),(c) and (d) of the said Order are notapplicable to the Company.
(b) The Company has not taken any loans, secured or unsecured, from companies, firms orother parties covered in the register maintained under Section 301 of the Act. Therefore,the provisions of clauses 4(iii)(f) and (g) of the said Order are not applicable to theCompany.
4. In our opinion, and according to the information and explanations given to us, thereis an adequate internal control system commensurate with the size of the Company and thenature of its business for the purchase of inventory and fixed assets and for the sale ofgoods and services. Further, on the basis of our examination of the books and records ofthe Company, and according to the information and explanations given to us, we haveneither come across, nor have been informed of, any continuing failure to correct majorweaknesses in the aforesaid internal control system.
5. According to the information and explanations given to us, there have been nocontracts or arrangements that need to be entered in the register maintained under Section301 of the Act.
6. The Company has not accepted any deposits from the public within the meaning ofSections 58A and 58AA of the Act and the rules framed thereunder.
7. In our opinion, the Company has an internal audit system commensurate with its sizeand the nature of its business.
8. We have broadly reviewed the books of account maintained by the Company in respectof products where, pursuant to the rules made by the Central Government of India, themaintenance of cost records has been prescribed under clause (d) of sub-section (1) ofSection 209 of the Act, and are of the opinion that, prima facie, the prescribed accountsand records have been made and maintained. We have not, however, made a detailedexamination of the records with a view to determine whether they are accurate or complete.
9. (a) According to the information and explanations given to us and the records of theCompany examined by us, in our opinion, the Company is generally regular in depositingundisputed statutory dues in respect of income tax though there has been a slight delay ina few cases, and is regular in depositing undisputed statutory dues, including providentfund, investor education and protection fund, employees’ state insurance, wealth tax,sales tax, service tax, customs duty, excise duty and other material statutory dues, asapplicable, with the appropriate authorities.
(b) According to the information and explanations given to us and the records of theCompany examined by us, there are no dues of wealth-tax and customs duty which have notbeen deposited on account of any dispute. The particulars of dues of income tax, salestax, service tax and excise duty as at 31st December, 2012 which have not been depositedon account of a dispute, are as follows:
| Name of the statute | Nature of dues | Amount* | Period to which the amount relates | Forum where the dispute is pending |
| | Rs. in lakhs | | |
| The Income-tax Act, 1961 | Income-tax including interest, as applicable | 12,38.27 | Assessment Years 2007-2008 and 2008-2009 | Appellate Authority – up to Commissioner’s level |
| | 2,86.79 | Assessment Year 1990-1991 and 1999-2000 | Tribunal |
| The Central Sales Tax Act, 1956 and Local Sales Tax Acts | Sales tax including interest and penalty, as applicable | 17,70.63 | Several demands pertaining to the period 1983-1984 and 1988 to 2010 | Appellate Authority – up to Commissioner’s level |
| | 3,16.51 | Several demands pertaining to the period 1990-1991, 1998-1999, 1999-2000 and 2001-2002 to 2005-2006 | Tribunal |
| | 92.06 | Several demands pertaining to the period 1990-1991, 1994-1996, 1999-2000 and 2001-2002 | The High Court of Judicature at Allahabad, Lucknow, Punjab and Haryana and Kerala |
| The Finance Act, 1994 | Service tax | 1,29.20 | January 2001 to December 2002 | Customs, Excise and Service Tax Appellate Tribunal (CESTAT) |
| The Central Excise Act, 1944 | Excise duty including interest and penalty, as applicable | 2,63.82 | Several demands pertaining to the period March 1992 to November 1998, July 2007 to November 2007 and January 2011 to December 2011 | Appellate Authority – up to Commissioner’s level |
| | 2,89.17 | Several demands pertaining to the period October 1994 to January 1995, September 1996 to September 2002 and November 2003 to January 2007 | Customs, Excise and Service Tax Appellate Tribunal (CESTAT) |
| | 30.12 | 1977 to 1980 | The High Court of Judicature at Bombay |
*Net of amounts paid including under protest.
10. The Company has no accumulated losses as at the end of the financial year and ithas not incurred any cash losses in the financial year ended on that date or in theimmediately preceding financial year.
11. According to the records of the Company examined by us and the information andexplanation given to us, the Company has not defaulted in repayment of dues to anyfinancial institution or bank or debenture holders as at the balance sheet date.
12. The Company has not granted any loans and advances on the basis of security by wayof pledge of shares, debentures and other securities. Therefore, the provisions of clause4(xii) of the Order are not applicable to the Company.
13. As the provisions of any special statute applicable to chit fund / nidhi/ mutualbenefit fund / societies are not applicable to the Company, the provisions of clause4(xiii) of the Order are not applicable to the Company.
14. In our opinion, the Company is not dealing in or trading in shares, securities,debentures and other investments. Accordingly, the provisions of clause 4(xiv) of theOrder are not applicable to the Company.
15. In our opinion, and according to the information and explanations given to us, theCompany has not given any guarantee for loans taken by others from banks or financialinstitutions during the year. Accordingly, the provisions of clause 4(xv) of the Order arenot applicable to the Company.
16. The Company has not raised any term loans. Accordingly, the provisions of Clause4(xvi) of the Order are not applicable to the Company.
17. According to the information and explanations given to us and on an overallexamination of the balance sheet of the Company, we report that the no funds raised onshort-term basis have been used for long-term investment.
18. The Company has not made any preferential allotment of shares to parties andcompanies covered in the register maintained under Section 301 of the Act during the year.Accordingly, the provisions of clause 4(xviii) of the Order are not applicable to theCompany.
19. The Company has not issued any debentures during the year and does not have anydebentures outstanding as at the beginning of the year and at the year end. Accordingly,the provisions of clause 4(xix) of the Order are not applicable to the Company.
20. The Company has not raised any money by public issues during the year. Accordingly,the provisions of clause 4(xx) of the Order are not applicable to the Company.
21. During the course of our examination of the books and records of the Company,carried out in accordance with the generally accepted auditing practices in India, andaccording to the information and explanations given to us, we have neither come across anyinstance of material fraud on or by the Company, noticed or reported during the year, norhave we been informed of any such case by the Management.
| For Price Waterhouse & Co., Bangalore |
| Firm Registration Number: 007567S |
| Chartered Accountants |
| Asha Ramanathan |
| Partner |
| Mumbai, 19th February, 2013 | Membership Number: 202660 |