Pfizer Ltd Directors Report.

Independent Auditors Report

To the Members of Pfizer Limited

Report on the Audit of the Financial Statements Opinion

1. We have audited the accompanying financial statements of Pfizer Limited (‘the Company), which comprise the Balance Sheet as at 31 March 2021, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies 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 (‘Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Indian Accounting Standards (‘Ind AS) specified under section 133 of the Act, of the state of affairs of the Company as at 31 March 2021, 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 matter How our audit addressed the key audit matter
(1) Contingent liability for litigations under Value Added Tax (VAT) and Central Sales Tax (CST) [Refer Note 23 and 41 in the financial statements] Our audit procedures included but were not limited to the following:
The Company has outstanding litigations pertaining to Sales tax/ Value added tax (VAT) for several assessment years which the Company has challenged at different forums. These litigations pertain to following two categories: We obtained an understanding of the managements process for:
A. Litigation on account of non-submission of documentary evidence at the time of assessment such as Form F and Form C pending to be issued by concerned authorities. Total liability in this category is Rs. 415.82 crores, out of which Rs.5.56 crores have been provided for and Rs.40.87 crores have been disclosed as contingent liability in accordance with Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets, based on managements assessment in consultation with professional advice from the external tax consultants. - identification of legal and tax matters initiated against the Company,
B. Litigation involving question of law and certain disallowance made by authorities in assessment orders that the Company has appealed against before the relevant appellate authorities. Total demand for such cases is Rs.143.45 crores, out of which Rs.32.24 crores have been provided for and Rs.24.61 crores have been disclosed as contingent liability in accordance with Ind AS 37, based on managements assessment in consultation with professional advice from the external tax consultants. - assessment of accounting treatment for each such litigation identified under Ind AS 37 accounting principles, and for measurement of amounts involved.
The eventual outcome of these legal proceedings is dependent on the outcome of future events and unexpected adverse outcomes could significantly impact the Companys reported profits and balance sheet position. We evaluated the design and tested the operating effectiveness of key controls around above process.
The amounts involved are material and the application of accounting principles as given under Ind AS 37, in order to determine the amount to be recorded as a liability or to be disclosed as a contingent liability, in each case, is inherently subjective, and needs careful evaluation and judgement to be applied by the management. We obtained an understanding of the nature of litigations pending against the Company and discussed the key developments during the year for key litigations with the management and respective legal counsels handling such cases on behalf of the Company. We also tested the independence, objectivity and competence of such management experts involved.
Key judgments are also made by the management in estimating the amount of liabilities, provisions and/or contingent liabilities related to aforementioned litigations. On a sample basis, we obtained and reviewed the necessary evidence which includes correspondence with the external tax consultants, and where necessary, inspected minutes of case proceedings available in public domain, to support the decisions and rationale for creation of provisions and / or disclosure of contingent liabilities in respect of each such litigation selected for testing.
Considering the degree of judgment, significance of the amounts involved, inherent high estimation uncertainty and reliance on external tax experts, this matter has been identified as a key audit matter for the current year audit. We focused on the developments in the existing litigations and new litigations, which could have materially impacted the amounts recorded as provisions or disclosed as contingent liability in the financial statements. We reviewed the demand notices, assessment orders and appeal orders for all such cases where there was any update since previous year audit and obtained grounds of appeal submitted by the management at various authorities in consultation with their external tax consultants.
For litigations on account of non-submission of documentary evidence, we obtained managements plan of action to obtain remaining forms/documentary evidences from VAT authorities in different states and actions taken by the management in this respect, and with the assistance of our Indirect tax team, validated the managements assessment and plan of action as obtained above.
We reviewed each external tax consultants response to ensure that the conclusions reached are supported by sufficient rationale according to the relevant laws and adequate information is included for the management to determine the appropriate accounting treatment of such cases in the financial statements.
We assessed the appropriateness of methods used, and the reliability of underlying data for the underlying calculations made for quantifying the amounts involved. We also tested the arithmetical accuracy of such calculations.
We have evaluated the adequacy of disclosures made by the Company in the financial statements in view of the requirements as specified in the Indian Accounting Standards. Based on the audit procedures performed, the judgements made by the management appears to be reasonable and disclosures made in respect of these litigations were appropriate in the context of the financial statements taken as a whole.
(2) Contingent liability for DPCO Matters [Refer Note 18 and 39 in the financial statements) Our audit procedures included but were not limited to the following:
The pharmaceutical industry is heavily regulated which increases inherent litigation risk. The Company faces a number of legal and regulatory cases, of which the most significant is a litigation under DPCO as disclosed in Note 18 and 39 to the financial statements. DPCO has issued various orders/notification for fixing the price of various pharma products. We obtained an understanding of the managements process for updating the status of the legal case, assessment of accounting treatment in accordance with Ind AS 37, and for measurement of amounts involved.
With respect to the sales made by the Company of the pharmaceutical products covered by the aforementioned DPCO orders, in earlier years as well as the current year, the Company has received demand notices for alleged overcharging price (charging price over the price fixed by the DPCO for such products). We evaluated the design and tested the operating effectiveness of key controls around above process.
The Company has challenged these demands form DPCO and the cases are pending at various High Courts in India. We inspected correspondence with the Companys external legal counsel in order to corroborate our understanding of these matters, accompanied by discussions with both internal and external legal counsels. We also tested the independence, objectivity and competence of such management experts involved and lawyers representing these cases in the courts.
Total demand from above cases aggregates to Rs.175.96 crore out of which the Company has provided Rs. 20.45 crore while Rs.155.51 crore has been disclosed as contingent liability based on managements assessment in accordance with professional legal advice from the dealing lawyers. We obtained direct confirmation from the external legal counsel handling DPCO litigation with respect to the legal determination of the liability arising from such litigation, and assessment of resulting provision recognised and contingent liability disclosures in the financial statements in accordance with requirements of Ind AS 37.
The amounts involved are material and the application of accounting principles as given under Ind AS 37, in order to determine the amount to be recognised as a liability or to be disclosed as a contingent liability, is inherently subjective, and needs careful evaluation and judgement to be applied by the management. We also evaluated the response received from the legal counsel to ensure that the conclusions reached is supported by sufficient legal rationale.
Key judgments are also made by the management in estimating the amount of liabilities, provisions and/ or contingent liabilities related to aforementioned litigation. We assessed the appropriateness of methods used, and the reliability of underlying data for the underlying calculations made for quantifying the amounts involved. We also tested the arithmetical accuracy of such calculations.
We focused on this area as the eventual outcome is uncertain and unexpected adverse outcomes could significantly impact the financial position, and hence, considered this matter to be a key audit matter for the current year audit. We evaluated the Companys disclosures for adequate disclosure regarding the significant litigations of the Company.
Based on the audit procedures performed, the judgements made by the management appears to be reasonable and disclosures made in respect of these litigations were appropriate in the context of the financial statements taken as a whole.
(3) Discontinuation of Consumer Health products. Our audit procedures included but were not limited to the following:
[Refer Note 14, 25 and Note 44 in the financial statements) Pfizer Inc. (ultimate parent company) and GlaxoSmithKline plc formed a joint venture ("GSK JVCo") for consumer health business which has taken over the consumer health product portfolio of Pfizer Group ("PCH"). We obtained agreements and letter correspondence between the parties to gain an understanding of the transaction pertaining wind down of the PCH products in India.
GSK JVCo conveyed its decision to not integrate/ transfer the PCH India Business into GSK JVCo and instead had requested Pfizer Limited to Wind down the PCH India Business. PCH business in India consists of only two brands Anacin and Anne French. We held discussion with the management/Board of directors and also with inhouse legal counsel.
As a part of the contractual agreement between the entities, Pfizer Inc is required to reimburse the wind down cost to the Company provided that Pfizer Inc. receives such reimbursement from the GSK JVCo. Pfizer Inc will further pay the Company the Fair market value (FMV) of the PCH Business amounting to Rs. 27.50 as approved by the Board of Directors of Pfizer India, which has been determined by two third-party valuation firms. We evaluated the design and tested the operating effectiveness of key controls around above process and over the determination of appropriate accounting treatment of this transaction.
The Company has completed the necessary procedures to wind down the PCH product and has recorded FMV in other income and wind down costs as receivable (Other current financial assets) from Pfizer Inc. after evaluating the provisions of (a) Ind As 105 "Non-Current assets held for sale & Discontinuing Operations", (b) Ind As 115 "Revenue from Contracts with Customers". Held discussion with auditors tax experts and transfer pricing experts to evaluate the impact of the transaction.
Considering the materiality of amounts, and significant judgements involved in determining of the fair market value and the underlying accounting treatment, this matter has been considered as a key audit matter for the current year audit. Evaluated whether the accounting principles applied by the management fairly present the effects of the transactions in the financial statements in accordance with the principles of Ind AS.
Verified cost incurred with regard to wind down of the PCH business i.e legal expenses, employee severance, destruction of inventory, compensation to contract manufacturers etc.
Obtained valuation report for FMV of PCH products.
Verified accrual for such FMV to be received from Pfizer Inc.
Assessed the valuation methodology used by the Company and tested the mathematical accuracy of the valuation model;
Involved auditors valuation specialists to challenge the key assumptions such as discount rate and the valuation methodology;
We evaluated the adequacy of disclosures made by the Company in the financial statements in view of the requirements as specified in the Indian Accounting Standards Based on the audit procedures performed, the judgements made by the management appears to be reasonable and disclosures made in respect of the transaction are appropriate in the context of the financial statements taken as a whole.

Information other than the Financial Statements and Auditors Report thereon

6. The Companys Board of Directors is 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 will 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 is responsible for the matters stated in section 134(5) of the Act with respect to the preparation 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 accounting principles generally accepted in India, including the Ind AS specified under section 133 of the Act. 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 financial statements, management 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

9. Those 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, 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 managements 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;

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, 2016 (‘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.

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) 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;

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 2021 from being appointed as a director in terms of section 164(2) of the Act;

f) we have also audited the internal financial controls with reference to financial statements of the Company as on 31 March 2021 in conjunction with our audit of the financial statements of the Company for the year ended on that date and our report dated 26 May 2021 as per Annexure II expressed unmodified opinion; and

g) 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 39, 41 and 42 (i) (a) and (c) to the financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2021.

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 2021.;

iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31 March 2021; and

iv. the disclosure requirements relating to holdings as well as dealings in specified bank notes were applicable for the period from 8 November 2016 to 30 December 2016, which are not relevant to these financial statements. Hence, reporting under this clause is not applicable.

Annexure I

Annexure I to the Independent Auditors Report of even date to the members of Pfizer Limited on the financial statements for the year ended 31 March 2021

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that: (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this program, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification.

(c) The title deeds of all the immovable properties (which are included under the head ‘Property, plant and equipment) are held in the name of the Company.

(ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year, except for goods-in-transit, and no material discrepancies between inventory and book records were noticed on physical verification.

(iii) The Company has not granted any loan, secured or unsecured to companies, firms, Limited Liability Partnerships (LLPs) or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clauses 3(iii)(a), 3(iii)(b) and 3(iii)(c) of the Order are not applicable.

(iv) In our opinion, the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of loans, investments, guarantees and security.

(v) In our opinion, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Act in respect of Companys products/services 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 cost records with a view to determine whether they are accurate or complete.

(vii) (a) Undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, goods and service tax (GST), cess and other material statutory dues, as applicable, have generally been regularly deposited to the appropriate authorities, though there has been a slight delay in a few cases. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable.

(b) The dues outstanding in respect of income-tax, sales-tax, service tax, duty of customs, duty of excise and value added tax on account of any dispute, are as follows:

Statement of Disputed Dues

Name of Statute Forum where dispute is Pending Period to which the Amount relates Nature of dues Amount Amount paid under Protest
The Income Tax Act, 1961 Commissioner of Income Tax, Appeals 2002-2003 to 2003-2004, 2005-2006, 2011-2012 to 2013-2014, 2017-2018 Transfer pricing adjustment, income from house property, long-term capital gain and other disallowance of expenses 70.14 69.12
Commissioner of Income Tax, Appeals 2010-2011 to 2011-2012, 2013-2014 to 2019-2020 Tax deducted at source 48.19 4.28
Income Tax Appellate Tribunal 1984-1985, 1991-1992 to 2010-2011, 2012-2013, 2014-2015 to 2016-2017 Disallowance of near expiry/ transit loss stock write off and other disallowance of expenses 384.90 248.69
Honble High Court of Bombay 2006-2007 to 2009-2010, 2012-2013 Tax deducted at source 20.11 4.09
The Central Excise Act, 1944 Honble High Court of Bombay 2004-2005 to 2006-2007 Disallowance of availment of CENVAT* credit 6.31 0.78
Customs Act, 1962 Commissioner (Appeals) 1995 Classification Matter 0.01 -
Customs Excise Service Tax Appellate Tribunal (CESTAT) 2012-2013 Demand of Special Additional duty (SAD) 1.31 1.31
Customs Excise Service Tax Appellate Tribunal (CESTAT) 2015-2016 Anti -dumping duty 1.00 0.08
Honble Supreme Court of India 1996-1997 Classification Matter 0.47 0.05
Value Added Tax Act and State and Central Sales Tax Assessing officer 2011-12 to 2016-17 Pending statutory declaration forms and others 0.51 0.05
Value Added Tax Act and State and Central Sales Tax Additional commissioner 1997-1998, 1998-99, 2002- 2003,2008-2009 to 2017-2018 Pending statutory declaration forms, disallowance of credit notes and others 57.89 7.82
Assistant Commissioner 1986-1987, 2004-2005, 2010-2011 to 2017-2018 Pending statutory declaration forms, disallowance of credit note and input tax credit and others 4.38 0.55
Deputy Commissioner 1993-1994 to 1996-1997, 1999-2000 to 2003-2004, 2005-2006 to 2017-2018 Pending statutory declaration forms, disallowance of credit note and input tax credit and others 63.23 12.88
Joint Commissioner 1983-1984, 1985-1986 to 1986-1987, 1994-1995, 1995-1996, 1998-1999, 2000-2001 to 2016-2017 Pending statutory declaration forms, disallowance of credit note and input tax credit and others 363.92 98.19
Revision Board 2006-2007 to 2009-2010 Pending statutory declaration forms, disallowance of credit notes and others 0.37 0.31
Commissioner (Appeals) 2005-2006, 2012-2013 Pending statutory declaration forms and others 0.18 0.04
Various Tribunals 1991-1992, 1992-1993, 1994-1995 to 1996-1997, 1999-2000 to 2001-2002, 2003-2004 to 2013-2014 Pending statutory declaration forms, disallowance of credit note and input tax credit and others 66.75 18.74
Honble High court 1995-1996, 2012-2013 to 2013-2014 Levy of tax and interest 1.94 1.14
Honble Supreme court 1992-93 Levy of tax and interest 0.10 -

* Central Value Added Tax (CENVAT)

(viii) The Company has no loans or borrowings payable to a financial institution or a bank or government and no dues payable to debenture-holders during the year. Accordingly, the provisions of clause 3(viii) of the Order are not applicable.

(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments) and did not have any term loans outstanding during the year. Accordingly, the provisions of clause 3(ix) of the Order are not applicable.

(x) No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been paid and provided by the Company during the year in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act read with Schedule V to the Act.

(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable, and the requisite details have been disclosed in the financial statements, as required by the applicable Ind AS.

(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures.

(xv) In our opinion, the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

Annexure II

Independent Auditors Report on the internal financial controls with reference to the financial (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (‘the Act)

1. In conjunction with our audit of the financial statements of Pfizer Limited (‘the Company) as at and for the year ended 31 March 2021, we have audited the internal financial controls with reference to financial statements of the Company as at that date.

Responsibilities of Management and Those Charged with Governance for Internal Financial Controls

2. The Companys Board of Directors is responsible for establishing and maintaining internal financial controls based on the IFCoFR criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of IFCoFR issued by the Institute of Chartered Accountants of India ("the ICAI"). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of the Companys business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors Responsibility for the Audit of the Internal Financial Controls with Reference to Financial Statements

3. Our responsibility is to express an opinion on the Companys internal financial controls with reference to 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 (‘ICAI) prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements, and the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (‘the Guidance Note) issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements were established and maintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements includes obtaining an understanding of such internal financial controls, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls with reference to financial statements .

Meaning of Internal Financial Controls with Reference to Financial Statements

6. A companys internal financial controls with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial controls with reference to financial statements include those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with Reference to Financial Statements

7. Because of the inherent limitations of internal financial controls with reference to financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to financial statements to future periods are subject to the risk that the internal financial controls with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion, the Company has, in all material respects, adequate internal financial controls with reference to financial statements and such controls were operating effectively as at 31 March 2021, based on the IFCoFR criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by the ICAI. statements under Clause

For Walker Chandiok & Co LLP

Chartered Accountants

Firms Registration No.: 001076N/N500013

Ashish Gupta

Partner

Membership No.: 504662

UDIN: 21504662AAAADR7419

Place: New Delhi

Date: 26 May 2021