Samrat Pharmachem Ltd Directors Report.

To the Members of, Samrat Pharmachem Limited

Report on the Financial Statements

Opinion

We have audited the accompanying financial statements of Samrat Pharmachem Limited (the Company), which comprise the Balance Sheet as at 31st March 2020, the Statement of Profit & Loss (including the Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity of the Company for the year then ended and notes to the financial statements including summary of significant accounting policies and other explanatory information.

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, read with the Companies (Indian Accounting Standards) rules, 2015 as amended, and other accounting principles generally accepted in India, of the state of affairs (financial position) of the Company as at 31st March 2020, and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

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 there under, 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 on financial statements.

Key Audit Matters

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.

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

a) Revenvue Recognition :

The Company has adopted "Ind-AS 115 - Revenue from Contracts with Customers" which is the revenue accounting standard. The application and transition to this accounting standard is complex and is an area of focus in the audit.

? Revenue for the Company consists primarily of sale of manufactured goods recognized as per the accounting policy described in Note 2(m) to the accompanying financial statements.

? The Company recognises revenue from sale of goods when it satisfies its performance obligation, in accordance with the principles of Ind-AS 115, Revenue from Contracts with Customers, adopted by the Company from the current year, by transferring the control of goods to its customers through delivery evidenced by acknowledgement of receipt of goods by such customers.

? Considering the large volume of revenue transactions near period end there may be a risk of revenue recognition occurring before the satisfaction of the performance obligations by the company in accordance with the applicable Incoterms.

? Considering the above factors, revenue recognition was identified as a key audit matter for the current year audit.

Auditors Response: Principal Audit Procedure Our audit work included, but was not limited to, the following procedures:

? Obtained an understanding of the revenue and receivable business process, and assessed the appropriateness of the accounting policy adopted by the company for revenue recognition.

? Evaluated design and implementation of the key controls around revenue recognition including controls around contract approvals, invoice verification, transporter confirmations and customer acknowledgements.

? Tested operating effectiveness of the above identified key controls over revenue recognition near period end.

? For samples selected from revenue recorded during specific period, before and after year end: o Verified the customer contracts for delivery terms. o Verified the customer acknowledgements to evidence proof of delivery for domestic sales at or near period end and o tracked shipments through bill of lading for export sales

? Tested the appropriateness of the disclosures made in the financial statements for revenue recorded during the year.

Key Observations

? Based on our audit work, we did not identify any evidence of material misstatement in the revenue recognised in the year ended on 31 March 2020.

b) Litigation, claims and related provisions:

The company is in the pharmaceutical industry which is heavily regulated, resulting in increased exposure to litigation risk. These provisions are based on judgement and incorporated accounting estimates by management in determining the likelihood and magnitude of an unfavorable outcome on the claims.

Auditors response:

Evaluating the design and testing the operating effectiveness of controls in respect of the recognition and measurement of provisions towards litigation and claims in compliance with Ind-AS 37 Provisions, Contingent Liabilities and Contingent Assets.

Corroborating managements assessment by

? making enquiries with the in-house/outsourced legal counsel of the company;

? verifying correspondence, orders and appeals in respect of open litigation;

? Obtaining confirmations from external legal counsels where relevant and/ or evaluating legal opinions obtained by the management.

c) Property, Plant and Equipments:

Peculiarity and technical complexities of Property, Plant and Equipments, Capital Work-In-Progress used in the operations and different IT systems used for maintaining Fixed Asset Register (FAR) requires more attention to ensure reasonably accurateness and completeness of financial reporting in respect of Property, Plant and Equipments and Capital W.I.P.

Further, due to technical complexities management is required to assess and make estimates/judgments about capitalization, estimated useful life, impairment etc. which has material impact on Balance Sheet and operating results.

Auditors Response :

Our audit approach consisted of testing of the design and operating effectiveness of the internal controls and substantive testing as follows:

? We assessed the Companys process regarding maintenance of records, Valuation and accounting of transactions relating to Property, Plant and Equipment and Capital W.I.P. as per the Ind-AS 16

? We have carried out substantive audit procedures at financial and assertion level to verify the capitalization of asset as Property, Plant and Equipment and Capital W.I.P.

? We have verified the maintenance of records and accounting of transactions regarding capital work in progress by carrying out substantive audit procedures at financial and assertion level.

? We have reviewed management judgement pertaining to estimation of useful life and depreciation of the Property, Plant and Equipment in accordance with Schedule II of Companies Act, 2013.

? We have verified the capitalization of borrowing cost incurred on qualifying asset in accordance with the Ind-AS 23 Borrowing Cost.

d) Inventory

Inventories constitutes material component of financial statement. Correctness, completeness and valuation are critical for reflecting true and fair financial results of operations.

Auditors Response:

Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:

? We assessed the Companys process regarding Maintenance of records, Valuation and accounting of transactions relating to Inventory as per the Ind-AS 2.

? We have evaluated the design of Internal Controls relating to recording and valuation of Inventory.

? We have carried out substantive audit procedures at financial and assertion level to verify the allocation of overheads to Inventory.

? We have verified the process documents in respect of the physical verification of Inventory carried out by the management to verify the balance of the inventory at the year end.

? We have verified the compliance with the standard norms relating to production as framed and timely updated by the management.

Information Other than the Financial Statements and Auditors Report Thereon

The Companys Management and Board of Directors are responsible for the other information. The other information comprises of Management Reports such as Boards Report, Management Discussion and Analysis, Corporate Governance Report and Business Responsibility Report, but does not include the Financial Statements and our Auditors Report thereon which we obtained prior to the date of this Auditors Report, and the remaining section of the Companys Annual Report, which are expected to be made available to us after that date.

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 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.

If, based on the work we have performed on the other information that we obtained prior to the date of this Auditors Report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the other sections of Annual Report (other than those mentioned above), if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take necessary actions, as applicable under the applicable laws and regulations.

Managements Responsibility for the Financial Statements

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (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), Cash Flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind-AS) specified under Section 133 of the Act, read with relevant rules issued thereunder.

This responsibility also includes the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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.

In preparing the financial statements, the Management and Board of Directors are 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.

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

Auditors Responsibility for the Financial Statements

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 SAs 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.

As part of an audit in accordance with SAs, 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 in the financial statements made by the Management and Board of Directors.

? Conclude on the appropriateness of the Management and 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.

? Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures in the financial statements made by the Management and Board of Directors.

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.

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.

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

1 As required by the Companies (Auditors Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the ‘Annexure A, a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

2 As required by section 143 (3) of the Act, we report that:

i. 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;

ii. 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;

iii. the Balance Sheet and the Statement of Profit and Loss (including other comprehensive income), the statement of changes in equity and the statement of Cash Flow Statement dealt with by this Report are in agreement with the books of account;

iv. in our opinion, the aforesaid financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act, read with relevant rules issued thereunder;

v. on the basis of written representations received from the directors as on 31st March 2020, and taken on record by the Board of Directors, none of the directors are disqualified as on 31st March 2020, from being appointed as a director in terms of Section 164 (2) of the Act.

vi. with respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure B; and

vii. With respect to the other matters to be included in the Auditors Report in accordance with the requirements of Section 197(16) of the Act, amended:

In our opinion and according to the information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under section 197 916) which are required to be commented upon by us.

viii. 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, in our opinion and to the best of our information and according to the explanations given to us:

a) the Company has disclosed the impact of pending litigations on its financial positions in its financial statements. Refer to Note 42 to the financial statements.

b) the Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

c) Since the company has not declared any dividend in the recent past years, no amounts are required to be transferred by the company to Investor Education & Protection Fund.

For Shah & Savla LLP

Chartered Accountants

FRN: 109364W / W100143

Miral H. Nagda

Partner

Membership No.: 108135

UDIN : 20108135AAAABC3423

Place : Mumbai

Date : 31 July 2020

Annexure A to the Auditors Report

The Annexure referred to in our report to the members of Samrat Pharmachem Limited (the Company) for the year Ended on 31st March, 2020. We report that:

(i) a) The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us substantial portion of the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable having regard to the size of the company and nature of its fixed assets. As informed to us no material discrepancies were noticed on such physical verification.

c) As per the information and explanation provided to us and as per the records presented before us the title deeds of immovable properties are held in the name of the company.

(ii) In our opinion the inventories have been physically verified by the management during the year at reasonable intervals and as explained to us no material discrepancies were observed on physical verification.

(iii) The company has not granted any amount as loan to person covered in the Register maintained under Section 189 of the Act and hence the sub-clauses dealing with the said reporting are not applicable.

(iv) As per the information and explanation given to us, the company has not granted any loans to directors of the company and company has not made any investment through more than two layers of investment companies. Thus, the said clause is not applicable to the company.

(v) According to information and explanations given to us, the Company has not accepted any deposits from the public. Accordingly, paragraph 3(v) of the order is not applicable to the Company.

(vi) We have been informed by the management that the Central Government of India has not prescribed the method of maintenance of cost records under sub-section (1) of Section 148 of the Act and the rules framed there under.

(vii) a) According to the information and explanations given to us and on the basis of our examination of the records of the company, undisputed statutory dues including Income-Tax, Sales-tax, Goods and Services tax, Custom duty, Excise duty and Value Added Tax, Cess and other material statutory dues applicable to it have generally been deposited with the appropriate authorities regularly. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding, as at 31st March, 2020 for period of more than six months from the date they became payable.

b) According to the information and explanations given to us, the details of dues of Income Tax, Sales Tax, Goods and Service Tax, Customs Duty, Excise Duty and Value Added Tax which have not been deposited as on March 31, 2020 on account of disputes are given below :-

Sr. No. Name of the Statute Nature of Dues Amount (in Rs.) Period to which amount relates Forum where dispute is pending
1 Income Tax Act, 1961 Income tax 715740 A.Y. 2011- 12 CIT(Appeals), Bharuch

(viii) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institution, banks. The Company did not have any debentures outstanding as at the year end.

(ix) We have been informed by the management that during the period covered by our audit report, the company did not raise any money by way of initial public offer or further public offer (including debt instruments) and Term Loans.

(x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

(xi) In our opinion and according to information and explanations given to us the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197, read with limits specified under Part II of Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company. Accordingly, paragraph 3 (xii) of the order is not applicable.

(xiii) As per the information and explanations given to us & represented by the management, we report that all the transactions with related parties are in compliance with Section 177 and 188 of Companies Act, 2013 where applicable and the details of such transactions have been disclosed in the financial statements as required by the Indian accounting standards.

(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragraph 3(xiv) of the order is not applicable to the Company.

(xv) As per the information and explanations given to us & represented by the management, during the year the company has not entered into any non-cash transactions with its directors or persons connected with him. Accordingly, paragraph 3(xv) of the order is not applicable to the Company.

(xvi) According to the information and explanation given to us, the Company is not required to be registered under Section 45 IA of the Reserve Bank of India Act, 1934.

For Shah & Savla LLP

Chartered Accountants

FRN: 109364W / W100143

Miral H. Nagda

Partner

Membership No.: 108135

UDIN : 20108135AAAABC3423

Place : Mumbai

Date : 31 July 2020

Annexure B to the Auditors Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

Opinion

We have audited the internal financial controls with reference to financial statements of Samrat Pharmachem Limited ("the Company") as of 31st March, 2020 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

In our opinion, the Company has, in all material respects, adequate internal financial controls with reference to financial statements and such internal financial controls were operating effectively as at 31st March, 2020, based on the internal financial controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the "Guidance Note").

Managements Responsibility for Internal Financial Controls

The Companys Management and the Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note. 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 its business, including adherence to 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

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 Guidance Note and the Standards on Auditing, prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements. 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 whether such controls operated effectively in all material respects.

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 included 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.

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

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

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.

For Shah & Savla LLP

Chartered Accountants

FRN: 109364W / W100143

Miral H. Nagda

(Partner)

Membership No.: 108135

UDIN : 20108135AAAABC3423

Place : Mumbai

Date : 31 July 2020