Jagsonpal Pharmaceuticals Ltd Auditor Reports

To the Members of Jagsonpal Pharmaceuticals Limited Report on the Audit of the Financial Statements

Opinion

1. We have audited the accompanying financial statements of Jagsonpal Pharmaceuticals Limited (the Company), which comprise the Balance Sheet as at 31 March 2025, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including material accounting policy information and other explanatory information.

2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 (the Act) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2025, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

5. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key audit matters	How our audit addressed the key audit matters
Revenue from sale of products:
Refer notes 2(d)(vii) and 21 to the financial statements for material accounting policy information and revenue related disclosures respectively.	Our audit procedures in relation to revenue from sale of products included, but were not limited to the following:
	- Obtained understanding of the revenue business processes of the Company;
The Company recognises revenue from the sale of pharmaceutical products when control of such products is transferred to the customer and there are no longer any unfulfilled obligations. Revenue towards a performance obligation is measured at the amount of transaction price allocated to that performance obligation and is accounted for net of rebates or discounts.	- Assessed the appropriateness of revenue recognition policy of the Company in accordance with Ind AS 115;
	- Involved our IT specialists to evaluate the design and test operating effectiveness of IT general controls and key automated controls of the Company\u2019s IT system which is used for revenue recognition;
The Company has a large number of customers operating in various geographies throughout the country and the sales contracts / arrangements with such customers have distinct / varying commercial terms. Accordingly, the Application/ applicability. of Ind AS 115, Revenue from Contracts with Customers (\u2018Ind AS 115\u2019) requires management to make certain judgement / estimates such as determining timing of transfer of control for revenue recognition and determining transaction price as per the terms of the contracts and arrangements.	- Evaluated the design and tested the operating effectiveness of key manual controls over revenue recognition;
	- Performed substantive analytical procedures which includes margin analysis and period-on-period variance analysis on revenue recognised during the year to identify any unusual indicators/trends;
	- Performed test of details by selecting samples of revenue transactions pertaining to sale of products recorded during the year and verified the underlying supporting documents including contracts / agreements, sales invoices, proofs of dispatch and delivery etc.;
Further, the Company considers revenue as a key benchmark for evaluating performances and hence, there is risk of revenue being overstated due to pressure to achieve targets and earning expectations and therefore, in line with the requirements of the Standards on Auditing, revenue is determined to be an area involving significant risk which requires significant auditor attention.	- Performed testing by selecting samples pertaining to revenue transactions recorded during specific period before the year end and after the year end to ensure revenue from such transactions is recorded in the correct period;
Owing to the amounts involved, volume of sales transactions, distinct/varied terms of contracts with customers and above-mentioned judgement /estimates, revenue from sale of products has been considered as a key audit matter for current year audit.	- Obtained management workings for amounts recognised towards rebates/discounts and returns during the year and as at year end. On a sample basis, tested the underlying calculations for amounts recorded as accruals and provisions towards the aforementioned obligations, as per the terms of related contracts and regulations, and traced the underlying data to source documents; and
	- Evaluated the appropriateness and adequacy of the related presentation and disclosures made in the financial statements in accordance with the requirements of applicable accounting standards
Business combination
Refer to Note 2(d)(iv) and 44 to the financial statements for material accounting policy information and business combination related disclosure respectively.	Our audit procedures with respect to said business combination included, but were not limited to, the following:
During the current year, the Company entered into a business transfer agreement and acquired the business of dermatology and childcare divisions of Yash Pharma Laboratories Private Limited.	- Obtained an understanding from the management with respect to business combination process and assessed the appropriateness of the Company\u2019s accounting policy related to business combination in accordance with Ind AS 103;
The Company has determined the aforesaid acquisition to be a business and has accounted this acquisition using the acquisition method of accounting in accordance with Ind AS 103 \u2018Business Combinations\u2019 (\u2018Ind AS 103\u2019), which requires the identified assets and liabilities to be recognised at fair value at the date of acquisition, with the excess of the purchase consideration over the fair value of identified assets and liabilities as goodwill.	- Evaluated the design and tested the operating effectiveness of the key controls over the accounting of business combination which includes valuation of identified assets and liabilities acquired under the business combination;
	- Obtained an understanding of the terms of agreements entered by the Company for the said acquisition to evaluate management\u2019s assessments towards control over the business and the acquisition date in accordance with Ind AS 103;
Pursuant to the acquisition, the Company has acquired and accounted for identifiable intangible assets amounting to INR 823.04 million, mainly comprising brands, technical know-how and non-compete right and goodwill of INR 96.93 million at the date of acquisition representing a significant portion of the purchase price being attributable to aforesaid assets.	- Obtained management\u2019s external valuation expert\u2019s report on purpose price allocation and evaluated the competence, capabilities and objectivity of management\u2019s expert;
	- Involved auditor\u2019s valuation expert to assist us in evaluating the appropriateness of the valuation models and the reasonableness of underlying key assumptions used by management\u2019s expert in determining the fair value of identified assets and liabilities as at the acquisition date;
The Company has appointed an external valuation expert to perform valuation of assets/liabilities for the purpose of allocation of the purchase price to the identified assets and liabilities including identified intangible assets acquired using various valuation models adopted by the expert, which involved significant judgements and estimates including the method used, future projections, relevant growth rates and the discount rate. Considering the significance of the acquisition to the overall financial statement, the significant judgement and estimates involved and the significant auditor attention required to test such management judgement and estimates, the accounting and valuation of aforesaid business combination has been considered as a key audit matter for the current year audit.	- Assessed the reasonableness of assumptions used and tested the projections included in the valuation models based on our understanding of the business and market conditions, with specific attention to inputs involving estimation and judgement, as identified by performing sensitivity analysis;
	- Tested the arithmetical accuracy of management\u2019s computations and valuation model; and
	- Evaluated the adequacy and appropriateness of the disclosures made in the financial statements in accordance with applicable accounting standards.

Information other than the Financial Statements and Auditors Report thereon

6. The Companys Board of Directors are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditors report thereon. The Annual Report is expected to be made available to us after the date of this auditors report.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

7. The accompanying financial statements have been approved by the Companys Board of Directors. The Companys Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS specified under section 133 of the Act and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

8. In preparing the statements, the Board of Directors is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

9. The Board of Directors is also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Financial Statements

10. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

11. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls;

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

Conclude on the appropriateness of Board of Directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern; and

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

12. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

13. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

14. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

15. As required by section 197(16) of the Act, based on our audit, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule V to the Act. 16. As required by the Companies (Auditors Report) Order, 2020 (the Order) issued by the Central Government of India in terms of section 143(11) of the Act we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable. 17. Further to our comments in Annexure I, as required by section 143(3) of the Act based on our audit, we report, to the extent applicable, 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 purpose of our audit of the accompanying financial statements; b) Except for the matters stated in paragraph 17(h) (vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended), 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. Further, the back-up of the books of accounts and other books and papers for one of the software of the Company maintained in electronic mode has not been maintained on servers physically located in India, on a daily basis; c) The financial statements dealt with by this report are in agreement with the books of account; d) In our opinion, the aforesaid financial statements comply with Ind AS specified under section 133 of the Act; e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2025 from being appointed as a director in terms of section 164(2) of the Act; f) The modification relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph 17(b) above on reporting under section 143(3)(b) of the Act and paragraph 17h(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended); g) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company as on 31 March 2025 and the operating effectiveness of such controls, refer to our separate report in Annexure II wherein we have expressed an unmodified opinion; and h) With respect to the other matters to be included in the Auditors Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us: i. the Company, as detailed in note 38 to the financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2025; ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31 March 2025; iii. there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended 31 March 2025; iv. (a) The management has represented that, to the best of its knowledge and belief, as disclosed in note 45(i) to the financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person(s) or entity(ies), including foreign entities (the intermediaries), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (the Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;

(b) The management has represented that, to the best of its knowledge and belief, as disclosed in note 45(ii) to the financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (the Funding Parties), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party

(Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and (c) Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under sub-clauses (a) and (b) above contain any material misstatement. v. The final dividend paid by the Company during the year ended 31 March 2025 in respect of such dividend declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend. Further as stated in note 35(b) to the accompanying financial statements, the Board of Directors of the Company have proposed final dividend for the year ended 31 March 2025 which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend; and vi. As stated in Note 46 to the financial statements and based on our examination which included test checks, the Company, in respect of financial year commencing on 1 April 2024, has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all relevant transactions recorded in the software except that the audit trail feature at the database level was enabled only for certain key users to log any direct data changes in the accounting software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with, other than the consequential impact of the exception given above. Furthermore, other than the consequential impact of the exception given above the audit trail has been preserved by the Company as per the statutory requirements for record retention from the date audit trail was enabled.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm\u2019s Registration No.: 001076N/N500013
Madhu Sudan Malpani
Partner
Membership No.: 517440
UDIN: 25517440BMLKDH6624
Place: Gurugram
Date: 06 May 2025