To the liquidator of
Sterling Biotech Limited
Report on the Audit of the Standalone Financial Statements
Disclaimer of Opinion
We were engaged to audit the accompanying standalone financial statements of Sterling Biotech Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2022, 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 notes to the financial statements, including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as Standalone Financial Statements).
We do not express an opinion on the accompanying Standalone Financial Statements of the Company, because of the significance of the matters described in the Basis for Disclaimer of Opinion section of this report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these Standalone Financial Statements.
Basis for Disclaimer of Opinion
We are unable to determine the consequential impact of certain specific transactions / matters and disclosures on the Standalone Financial Statements. Such specific transactions / matters include:
1. Material uncertainty relating to Going Concern
We draw attention to Notes No.1 and 15 read with Notes No. 21 of the Standalone financial statements, which indicate that-
a) As explained in the Note No.1 of the Standalone Financial Statements, the Company was admitted to corporate insolvency resolution process (,ClRP) vide order of the National Company Law Tribunal ("NCLT"), Mumbai Bench, dated June 11, 2018. The claims of financials creditors admitted under CIRP were Rs. 9,03,077lakhs.
The promoters made an application for One Time settlement (,OTS) of dues payable to financial creditors of the Company amounting to Rs. 3,10,920 Lakhs. Andhra Bank (lead banker for the Consortium for Financial Creditors) has made an application to National Company Law Tribunal, Mumbai Bench (NCLT) to withdraw Corporate Insolvency Resolution Process (CIRP) and accept the One Time Settlement offer made by the promoters and approved by the Committee of creditors. The Honble NCLT, Mumbai Bench, vide Order dated May 8, 2019 rejected the withdrawal of CIRP under section 12A and ordered liquidation of the company on a going concern basis, as per the provisions of the IBC as there was no resolution plan persisting for the company at that point in time.
Being aggrieved and dissatisfied by the said Order, various affected parties approached the Honble National Company Law Appellate Tribunal, New Delhi Bench, against the Order dated May 8, 2019. The Honble NCLAT vide Order dated August 28, 2019 has set aside the Order dated May 8, 2019 passed by the Hon ble NCLT, Mumbai Bench and approved withdrawal of CIRP subject to the compliance of Terms and /dl~lbrJS under Section 12A of the Code.
The Honble NCLAT made further clarifications on November 18, 2019 to its order dated August 28, 2019 providing 30 days to give effect to the settlement offer under Sec. 12A by the promoters of the company failing which the order of Honble NCLAT dated August 28,2019 shall be recalled and the order dated May 8, 2019 by Honble NCLT Mumbai shall stand restored and directed the Resolution Professional to continue till the process is completed under Section 12A.
The 30 days time limit was extended up to March 31, 2020 by the Supreme Court. Subsequently, the matter was taken up by the Honble Supreme Court on January 11, 2021, wherein the case was directed to be listed in the First week of February, 2021. Consequently, the case was taken up after few adjournments finally on February 22, 2021, wherein the Honble Supreme Court inter-alia dismissed the Miscellaneous Application filed by Richmond Investments Private Limited.
Therefore, the status quo, granted by the Honble Supreme Court also came to an end and pursuant to the order passed by the Honble NCLAT dated November 18, 2019, the order of Honble NCLAT dated August 28, 2019 stands recalled and the order of liquidation dated May 08, 2019 passed by the Adjudicating Authority stands restored and the Liquidator appointed by the Adjudicating Authority stands reinstated on February 22, 2021 and the Liquidation Process under the Insolvency & Bankruptcy Code, 2016 has begun.
Further as per the latest list of stakeholders (Version 2) dated February 14, 2022 issued by the liquidator, the claim of all the creditors amounting to Rs. 10,08,480.26 Lakhs has been admitted.
The liquidator had put a newspaper advertisement on July 21, 2021 in local & national newspapers inviting bids for acquisition of the Company as a whole, on a going concern basis, through an E-Auction process at reserve price of Rs. 548.46 crore. The last day for Submission of EOI along with Supporting Documents and EMD by the Bidder was on August 5,2021. Further last day for Verification of EOI, Supporting Documents and EMD by the liquidator was August 20, 2021.The detailed process is listed in the original process document dated October 21, 2021 which is being amended from time to time and same has been hosted on companys websites.
Initially, five (5) Bidders were declared as the Qualified Bidders, pursuant to the Process Document Version 1.0 dated 21.07.2021 issued with respect to e-Auction of Sterling Biotech Limited, as a whole, on a Going Concern basis. However, after due diligence conducted by such Bidders, all five Bidders withdrew from the Bidding Process. Subsequently, a Process Document Version 2.0 dated 21.10.2021 was issued for e-auction of Corporate Debtor as a whole, on a going Concern basis. Based on Process Document Version 2.0 dated 21.10.2021, five (5) Bidders were declared as the Qualified Bidders. Out of the said total five (5) Qualified Bidders, only four (4) Qualified Bidders had registered on the e-Auction portal and one (1) Qualified Bidder had withdrawn from the Bidding Process. On 31.01.2022, Honble NCLT passed an Order directing to maintain a Status Quo in the matter of IA No. 212 of 2022. Further, on 28.03.2022, Honble NCLT was pleased to vacate such Status Quo, due to which, the e-Auction process was resumed. On 04.04.2022 e-Auction was conducted and the Liquidator declared Perfect Day Inc. as the Successful Bidder on 05.04.2022. The Successful Bidder then filed an application bearing IA no. 1585 of 2022 in CP 490 of 2018 inter-alia seeking approval of the Acquisition Plan with Honble NCLT.
b) Although the company has positive cash profits, the Company has incurred net loss during the current and the previous year and has a negative net worth at the end of March 31, 2022.
c) The Companys current liabilities exceed the current assets as at the balance sheet date. d) The Government of India, Ministry of Corporate affairs vide order F No 3/107/2018-CL II (WR) dated April 10, 2018 has ordered Investigation into the affairs of the Company under Sec 212(1) (c) of the Companies Act, 2013 by Serious Fraud Investigation Office and the Director, SFIO wide order no SFIO 2017-18/V/13513/2018 dated April 13, 2018 and has appointed Shri Dheeraj Kumar (Senior Assistant Director) as Investigation Officer under Sec 212(4) of Companies Act, 2()13. Further the Enforcement Directorate has made an allegation against directors for criminal conspiracy with dishonest intention to cheat Andhra Bank and other public sector banks as per applicable provisions of Prevention of Money Laundering Act, 2002 and has attached the assets of the company. This matter is sub-judice and the impact, if any of the enquiry is unascertainable till the date of the adoption of these Standalone Financial Statements.
e) The company has extended corporate guarantee for borrowings included in claims admitted Rs. 9,03;077 lakhs as per point (a) above. However, the matter is sub judice and the outcome is unascertainable till the date of adoption of these Standalone Financial Statements.
f) The manufacturing activities of the Ooty plant of the Company have been temporarily discontinued with effect from June 28, 2018 due to alleged non-compliance of environmental norms after a change in stipulation of laws in the state of Tamil Nadu. The matter is currently under trial with the Environmental Pollution Control Board of Tamil Nadu and the plant is closed till the date of the adoption of these Standalone Financial Statements.
Pending the outcome of the matters described in the paragraph 1 to 17 and the matters disclosed in (a) to (f) above, and possible impact thereof, we are unable to obtain sufficient appropriate audit evidence as to whether the Company will be able to service its debts, realize its assets and discharge its liabilities as and when they become due over the period of next 12 months. Accordingly, we are unable to comment on whether the Company will be able to continue as Going Concern.
2. Corporate Guarantees and claims admitted
We draw attention to Note No. 21 read with Note No.1 and 16, which indicates that:
a) The borrowings from Banks and financial Institutions as per Standalone financial statement is Rs. 6,08,592.05 lakhs as on March 31, 2022 after considering Foreign Currency Loan/ECB. No Interest provision is made after June 11, 2018 i.e. after commencement of Corporate Insolvency Resolution Process (CIRP).
b) As mentioned in paragraph 1 (a) above and based on the records available in public domain as of February 11, 2019, the claims admitted as per "List of Claims" is Rs. 9,03,077 lakhs against total claims received from financial creditors Rs.15,01,3731akhs against outstanding liabilities during the CIRP.
c) These claims include claims admitted in relation to corporate guarantee provided by the company on behalf of the group companies which are not accounted for in the books of accounts. The matter is still pending.
d) As mentioned in paragraph 1 (a) above and based on the records available in public domain as of February 14,2022, the claims admitted as per "List of Claims (Version 2)" dated February 14, 2022 is Rs. 10,08,480.26 lakhs against total claims received from all the creditors Rs. 16,06,648.29 lakhs against outstanding liabilities during the liquidation Process.
3. Carrying Value of Plant, Property and Equipment ("PPE")
a) We draw attention to Note No.3 that we have not been provided with the fixed assets register disclosing full particulars including quantitative details, assets physical location, gross value and net block value of the property plant and equipment owned by the Company.
b) As informed by Company, it had not carried out the assessment of Provision/Impairment of Property Plant and Equipment as required under "Ind AS 36-lmpairment of Assets" and Accordingly, we are unable to conclude on the carrying value of Property Plant and Equipment and the consequential impact, if any, on the Standalone Financial Statement.
c) We draw attention to Note No. 4 of the Standalone Financial Statement that Company has received termination letter dated July 20, 2021 for SEZ Lease agreement for Baruch, Gujarat dated March 26, 2010 and Facility Agreement dated March 29, 2012 from the Resolution Professional of Sterling SEZ Infrastructure Limited. The Company through its Liquidator has challenged the same before the Honble NCLT, Mumbai Bench on August 09, 2021. Subsequently the Company has made the payment of outstanding facility maintenance charges and lease rental along with interest amounting to Rs.8S1.20 Lakhs.
4. Investment of Property
Disclosure of Fair Value of Investment Property is not made as the latest fair value report is not available with the management.
5. Investments
We draw attention to Note No.6 read with Note No. 35 of the Standalone Financial Statements, which indicates the investment of Rs. 1,58A02 lakhs of the Company in unquoted equity shares of various companies. The company has recorded an impairment adjustment of Rs. 1,58A02 lakhs against this amount FY 2018-2019. In absence of documentation, market-based assumptions and adequate valuation, we are unable to comment on the completeness, existence, valuation, rights and obligation and presentation and disclosure of the equity shares (unquoted) and impairment adjustment recorded in the Standalone Financial Statements.
6. Deferred Tax Assets
We draw attention to Note No.7 of the Standalone Financial Statements, in respect of recognition of deferred tax asset of Rs. 54,560.02 lakhs (March 31, 2021 Rs. 55,121.05 lakhs).
During the year company has made reversal of deferred tax asset of Rs. 561.03 lakhs from brought forward deferred tax assets of Rs. 55,121.05 lakhs. Accuracy of deferred tax assets could not be ascertained due to incomplete details of FAR (as mentioned in paragraph 3 of our report).
At this point of time and in absence of convincing evidence we cannot ascertain that sufficient future taxable income will be available against which such deferred tax assets can be realized, such recognition is not in accordance with Ind AS 12 "Income Taxes". Had the aforesaid deferred tax assets not been recognised, loss after tax for the year ended March 31, 2022 would have been higher by Rs. 54,560.02 lakhs and other equity would have been lower by Rs. 54,560.02 lakhs.
7. Cash and Bank Balances
During our audit we have sent balance confirmation to banks/financial institutions for March 31, 2022. We have not received response to our request for such balance confirmations towards Bank Balances of Rs. 183.18 lakhs (March 31, 2021 Rs. 191.90 lakhs) and Fixed Deposit of Rs. Nil (March 31, 2021 Rs. 8.39Iakhs). (Rs. in Lakhs)
-- .-- ---
Sr. No. | Particulars | Confirmation Matching with Books |
Confirmation Not Received * |
Difference in balance with confirmation *" |
Total No. of A/cs | Grand Total | |||
No. of A/cs | Amount | No. of Alcs | Amount | No. of Alcs | Amount | ||||
-- | |||||||||
I | Bank Balances Fixed Deposit with maturity of | 11 | 4,584.19 | 3 | 0.33 . | - | . | 14 | 4,584.53 |
2 | >3 month but <12 month | 1 | 15,255.77 | - | - | 1 | 15,255.77 | ||
~ | -- | . | |||||||
3 | In Fixed Deposits | 5 | 10.47 | 1 | 182.84 | 6 | 177.51 -- |
||
- | Grand Total # | 17 | 19,850.43 | 3 | 0.33 | 1 | 182.84 | 21 | 20,033.61 |
*in absence of confirmations, we are unable to determine whether any adjustments are required to the said balances as on March 31, 2022 and related disclosures in Standalone Financial Statements . .... in absence of detailed Bank Statement (Only Bank Balance Confirmation received), the Company has not made any adjustments to the Bank Balance and Fixed Deposit as on March 31, 2022. # includes Bank Balance and Fixed Deposits held outside india of Rs. 221.02 Lakhs (March 31, 2021 Rs. 249.21 Lakhs).
8. Contingent Liabilities
We draw attention to Note No. 21 of the Standalone Financial Statements, the Government of india, Ministry of Corporate Affairs have instructed Serious Fraud Investigation Office and the Director, SFIO to initiate investigation into the affairs of the company.
First information Report under Sec 154 of The Code of Criminal Procedure, 1973 suspecting criminal conspiracy and abuse of official position during the period 2005-2011 has been filed against Income Tax officers and Directors of the Company.
Further, Enforcement Directorate have made an allegation against directors for criminal conspiracy with dishonest intention to cheat Andhra Bank and other public sector banks as per applicable provisions of Prevention of Money Laundering Act, 2002 and has attached the assets of the company.
Pending outcome of the investigation, we are unable to determine the potential impact of non-compliance with applicable laws and determine whether any further adjustments that may be necessary to these Standalone Financial Statements.
9. Major Regulatory Non-Compliances
We are unable to comment on the impact, if any, on the Standalone Financial Statements for Non compliances relating to Holding of Annual General Meetings, and Secretarial Auditors and regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
10. Borrowings
Due to continuation of liquidation process, we have not received latest Bank Loan Statement and th eir confirmati ons from respective Banks and Financial Institution. In the absence of su ch direct confirmations from the ban ks / lenders or sufficient and appropriate alternate audit evidence, we are unable to comment on the adju stments and changes in classificati on of balan ces in accordance w ith the principles of Ind AS 1, Presentation of Standalone Financial Statements, if any, that may be required to the carrying value of the aforementioned balances in the accompanying Standalone Financial Statements.
11. Compliance with INO AS
The Company has generally complied with the Indian Accounting Standards prescribed under Section 133 of the Companies Act, 2013, Subject to IND AS 1, IND AS 12, IND AS 16, IND AS 40 and IND AS 105 as observed in thi s Report at various places.
12. Non-Moving Inventories
We draw attention to Note No.9 of the Standalone Financial Statements which includes non-moving Inventories of Rs. 91.43 lakhs (As at March 31, 2021: Rs. 92.51 lakhs) at factory located at Ooty, Tamilnadu. There is no movement in the stock since the operations is closed at factory, as mentioned in Paragraph 1 of our report as Management believes that no adjustments to the carrying value of the inventories is required as those are regularly monitored, maintained and in usable/ saleable condition . As per Ind AS - 2 Inventories are to be Valued at the lower of cost and net realisable value. However, we are unable to comment on the realisable value of these Inventories together with consequential impact.
13. Information pertaining to Committee of Creditors
We have been informed by liquidators that certain information; including the minutes of meetings of the Committee of Creditors and the outcome of valuation exercise carried out under the CIRP and Liquidation part of the Liquidation are confidential in nature and could not be shared with anyone other than the Committee of Creditors and NCLT. Accordingly, we are unable to comment on the possible financial impact, presentation and disclosures, if any, that may arise.
14. Advances for Capital goods & Advance to suppliers
We draw attention to Note No.8 & 12 which includes the balance of Advances for Capital goods of Rs. 34.94 lakhs (March 31, 2021 Rs. 33.45 lakhs) & Advance to suppliers of Rs. 74.84lakhs (March 31, 2021 Rs. 74.84 lakhs) are receivable for a substantial period. The balances are subject to confirmations and reconciliations. The reported Standalone Financial Statement may have consequential impact upon the receipt of confirmations and reconciliation, if any, is made.
15. Assets Held for Sale
We draw attention to Note no. 13(a) that the company has reclassified the land situated at Vadodara, Gujarat, from "Property Plant and Equipment" to "Assets held for sale" . As per Ind AS 105 Non-current assets held for sale and discontinued operations an entity shall measure a non-current asset classified as held for sale at the lower of its carrying amount and fair value less costs to sell/costs to distribute.
The Company has not determined the fair value as at the date of reclassification and has classified the land at its carrying valu e of Rs. 34.64 lakhs (March 31, 2021 Rs. 34.64 Lakhs). The same is not in compliance with Ind AS 105 and we are unable t o ascertain on the financial impact of the same if any.
16. Advances to staff and Other Payables
We draw attention to Note No. 12 which includes Staff Advance of Rs. 63.371akhs (March 31, 2021 Rs. 63.37Iakhs) in absence of complete information of persons from whom it is receivable, management has not ascertained its recoverability. In absence of provision there against, the loss for the year is understated to that extent Standalone Financial Statements.
Further, we draw attention to Note No. 20 which includes other Payable of Rs. 37.29 Lakhs (March 31, 2021 Rs.37.29 Lakhs) in absence of complete information of persons to whom it is payable, we cant ascertain the financial impact if any on the Standalone Financial Statements.
17. Unpaid dividend
Unpaid Dividend of Rs. 42,89,045/- pertaining to financial year ended December, 2010 is transferred to Investor Education and Protection Fund by the Company on August 24, 2021. Unclaimed Dividend account is not recorded in the financial statement
As per section 124(6) of the Companies Act, 2013 (Act) provides that all shares in respect of which dividend has not been paid or claimed for 7 consecutive years or more shall be transferred to Investor Education and Protection fund, compliance for the same has not been done.
Information Other than the Financial Statements and Auditors Report Thereon
In view of ongoing Liquidation process, the Liquidator is responsible for the preparation of the other information. The other information comprises the information included in the management Discussion and Analysis, Boards Report including Annexure to Boards Report, Corporate Governance and Shareholders Information, but does not include the Standalone Financial Statements and our auditors report there on. These reports are not made available to us.
Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion there on.
In connection with our audit of the Standalone 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 during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, 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.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Honble Supreme Court ("SC") has passed its Order dated February 22, 2021 for liquidation of M/s Sterling Biotech Limited "as going concern " . Dr. Mamta Binani who has already been appointed as the liqu idator of the company by NCLT order no CP{IB) 490/MB/2018/457 dated May 13, 2019 will continues to be liquidator of the company.
The Liquidator shall exercise the powers and duties as enumerated in sections 35 to 50, 52 to 54 of the Insolvency and Bankruptcy Code, 2016 read with Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
In view of ongoing liquidation process, The Liquidator 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 Standalone 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 specified under Section 133 of the Act, read with relevant Rules issued thereunder. This responsibility also includes 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, 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. Under sections 35 to 50, 52 to 54 of the Insolvency and Bankruptcy Code, 2016 read with Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, it is incumbent upon liquidator to manage the operations of the Company as a going concern and the statements have been prepared on going concern basis.
Auditors Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the IND AS 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 INO AS financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the IND AS 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, ifltentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system 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 Company s 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 INO AS 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 INO AS financial statements, including the disclosures, and whether the INO AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the INO AS financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.
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 . Since we have not expressed any opinion, no Key Audit Matter have been disclosed in the Audit Report.
Report on Other Legal and Regulatory Requirements
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 A", a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.
I. As requ ired by Section 143(3) of th e Act, we report that:
a) Due to the possible effects of the matters described in Basis for Disclaimer of Opinion paragraph, we are unable to obtain all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;
b) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;
c) In our opinion, we conclude that the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of accounts;
d) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the aforesaid Standalone Financial Statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended
e) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether such matters have any adverse effect on the functioning of the Company.
f) In the term of section 17 (1) (b) of the Insolvency and Bankruptcy Code, 2016 ("the Code"), the powers of the board of directors have been suspended and be exercised by the Liquidator of the Company. Hence, written representation from directors have not been taken on record by the Board of Directors. Accordingly, we are unable to comment whether none of the director is disqualified as on March 31, 2022 from being appointed as a director in the terms of Section 164 (2) of the Act.
g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Disclaimer of Opinion paragraph;
h) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure B".
II. 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 information and explanations given to us.
a) Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion, we are unable to state whether the Standalone Financial Statements disclose the complete impact of pending litigations on its financial position.
b) Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts.
c) Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion (Paragraph 17), we are unable to state whether there were any amounts which were required to be transferred during the year to the Investor Education and Protection Fund by the Company apart from the matter ,drs{)losed In the Emphasis of Matter paragraph .
". As required by Section 197 (16) of The Companies Act, 2013, we report that the Company has not paid remuneration to its directors. The compliances under the aforementioned section are not applicable.
IV. a) according to the information and explanations given to us, no funds have been advanced / loaned / invested by the Company to or in any other person(s) or entity(iesL including foreign entities with the understanding, - that the intermediary shall, whether directly or indirectly lend or invest in other person or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) and not provided any guarantee, security or the like on behalf of Ultimate Beneficiaries.
b) According to the information and explanations given to us, no funds have been received by the Company from person(s) or entityies), including foreign entities on behalf of the Ultimate Beneficiaries. Further the Company has not provided any guarantee or security to person(s) or entity(iesL including foreign entities on behalf of the Ultimate Beneficiaries.
c) On the basis of our examination of the books of accounts and following appropriate audit procedures considered reasonable and appropriate to the circumstances, nothing has come to the notice that has caused us to believe that the representations under sub-clause (i) and (ii) of clause contain any material mis-statement.
V. No dividend is declared or paid during the year by the Company with in the provisions of Section 123 of the Act, except as referred in Note 17 or our audit report.
For MRB & Associates Chartered Accountants,
Firm Registration Number: 136306W
M. No.: 058431 Place: Mumbai Date: August 02, 2022 UDIN: 22058431AOCQXU1692
Annexure-A to the Independent Auditors Report
The annexure referred to in our report to the members of Sterling Biotech Limited ("the company") for the year ended March 31, 2022. We report that:
i. In respect of its fixed assets:
a. (A) In absence of sufficient and appropriate audit evidence, we are unable to comment whether the Company has maintained proper records of Property, plant and equipment showing full particulars, including quantitative details and situation of Property, plant and equipment.
(B) The Company does not have any intangible assets. Hence, this clause is not applicable to the company.
b. We have not been provided reports of physical verification of fixed assets conducted by the management during the financial year 2021-22 or any of the preceding years. We have not been provided with the Companys policy on physical verification of fixed assets, its frequency and its reasonableness having regard to the size of the Company and nature of its assets. Accordingly, we are unable to comment on this Clause.
c. We have only been provided with title deed of Land held at Ooty, Jambusar & Karakhadi. Title deed provided and verified by us are in the name of the Company. However, in the absence of proper records of the fixed assets available with the Company, it is not possible for us to comment on the completeness of the title deeds for other immovable property, if any.
d. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not revalued its Property, plant and equipment (including Right-of-use assets) or Intangible assets or both during the year.
e. According to the information and explanations given to us, and as per the disclosure provided in Note 39{B) to the Standalone Financial Statements, no proceeding has been initiated or pending against the company for holding any Benami property under Benami Transaction (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
Ii. In respect of Inventory
a. The inventory has been physically verified by the management during the year at reasonable intervals. In our opinion the frequency of such verification is reasonable. no material discrepancies 10% or more in the aggregate for each class of inventory were noticed on such verification between physical stock and book records. The discrepancies noticed on verification between the physical stocks and the book records were not material having regard to the size of the operation of the Company and the same have been properly dealt with in the books of account.
b. The Company has not been sanctioned any working capital limits in excess of five crore rupees, in aggregate, from banks or financial institutions on the basis of security of current assets during the year. Accordingly, the requirement to report on clause 3{ii)(b) of the Order is not applicable to the Company. Further the company has not filed any statement with financials banks or financial institution dur:T[ld"the
year as the same is not applicable. . , , iiI. In respect of investments in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or any other parties
During the year the Company has not provided loans, advances in the nature of loans, stood guarantee or provided security to companies, firms, Limited Liability Partnerships or any other parties. Accordingly, the requirement to report on clause 3(iii)(a) to 3(iii)(f) of the Order is not applicable to th e Company.
iv. In respect of loan to Directors and Investments by the Company
As no information relating to the interests of the Directors in other companies as required under section 185
& 186 of the Act are made available to us, we are unable to comment on the compliance with the provisions of the said section for the loans and investments by the Company.
v. In respect of Deposits
According to the information and explanations given to us, the Company has not accepted any deposits within the meaning of sections 73 to 76 of the Act or any other relevant provisions of the Companies Act, 2013 and the rules framed there under. Accordingly, the requirement to report on clause 3(v) of the Order is not applicable to the Company.
vi. In respect of Cost Records
We have broadly reviewed the books of accounts maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 148 of the Companies Act, 2013 and we comment that prima facie, the prescribed accounts and records have been made and maintained.
vii. According to the information and explanations given to us, in respect of statutory dues
a. According to the information and explanations given to us and records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Cess, Goods and Service Tax, duty of custom, duty of excise, Value Added Tax, and other material statutory dues, as applicable, with the appropriate authorities.
b. According to the information and explanations given to us and on the basis of our examination of the records of the Company, there are no undisputed statutory dues including Provident Fund, Employees State Insurance and Goods & service tax, Income tax and Custom Duty outstanding as at the year-end for a period of more than six months from the date they became payable. Except unpaid dividend of Rs. 42.89 lakhs pertaining to the financial year ended December, 2010 which is transferred to Investor Education and Protection Fund by the Company on August 24, 2021.
c. According to the information and explanations given to us and as per the records of the Company, the details of disputed dues of Income Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Value Added Tax as at March 31, 2022 are as follows:
Sr. No. | Name of Statute |
Nature of Dues |
Rs. in Lakhs |
Period to which amount relates |
Forum where dispute is pending | ||||||||||
1 | The Central Excise Act, 1944 |
Show cause for Outdoor Catering |
5.65 |
2005-2012 |
CESTAT, Ahmedabad | ||||||||||
2 | The Central Excise Act, 1944 |
Show cause for Goods Transport Agency |
11.26 |
2008-2018 |
CESTAT, Ahmedabad | ||||||||||
3 | The Central Excise Act, 1944 |
Show cause for Air Travel- Airport-Fuel |
0.28 |
2015-2018 |
CESTAT, Ahmedabad | ||||||||||
4 | The Central Excise Act, 1944 |
Show cause for Banking services (lOBI) |
74.16 |
2013-2014 |
CESTAT, Ahmedabad | ||||||||||
5 | The Central Excise Act, 1944 |
Clearing of Finished Goods by availing benefits under Notification no. 12/2012- CE Dated 17.03.2012 |
781.05 |
2018-2019 |
CESTAT, Ahmedabad | ||||||||||
6 | The Central Excise Act, 1944 |
Denial of Credit on common inputs used in both dutiable and exempted products |
120.70 |
2011-2017 |
Commissioner, Coimbatore | ||||||||||
7 | The Central Excise Act, 1944 |
Denial of Credit on common inputs used in both dutiable and exempted products |
132.14 |
2016-2017 |
Additional Commissioner, Coimbatore | ||||||||||
8 | Central Sales Tax, 1956 |
Demand of purchases tax at the time of assessment with retrospective effect on material purchases against concessional forms |
296.72 |
2001-2004 |
Joint Commissioner | ||||||||||
9 | Central Sales Tax, 1956 |
Interest Charges on demand of purchase tax till Date 11.05.2019. |
374.46 |
2001-2004 |
Joint Commissioner | ||||||||||
10 | Central Sales Tax, 1956 |
Assessment order passed with demand of purchase tax on purchases of "0" rated in SEZ units |
103.90 |
2014-2015 |
Deputy Commissioner | ||||||||||
11 | The Central Excise Act, 1944 |
Denial of Credit on common inputs used in both dutiable and exempted products |
687.58 |
2008-2013 |
Commissioner Salem | ||||||||||
12 | The Central Excise Act, 1944 |
Denial of Credit on common inputs used in both dutiable and exem pted products |
0.74 |
2015-2017 |
Deputy Commissioner Coonoor Division | ||||||||||
13 | The Central Excise Act, 1944 |
Denial of Credit on common inputs used in both dutiable and exempted products |
1.50 |
2008-2012 |
In the Customs, Excise and Service Tax Appellate Trlb unal, Chennai | ||||||||||
14 | The Central Excise Act, 1944 |
Denial of Credit on common inputs used in both dutiable and exempted products |
573.82 |
2003-2017 |
In the High Court of Judicature At Madras | ||||||||||
15 | The Central Excise Act, 1944 |
Denial of Credit on common inputs used in both dutiable and exempted products (Industrial Sludge) |
0.29 |
2016-2018 |
Assistant Commissioner of GST and Central Excise, Coonoor Division |
||||||||||
16 | The Central Excise Act, 1944 |
Denial of Credit on common inputs used in both dutiable and exempted products |
235.32 |
2003-2017 |
Commissioner, Coimbatore |
||||||||||
17 | Service Tax Rules, 1994 |
Denial of Cenvat credit availed on ineligible input Services |
1.65 |
2013-2016 |
Asst Commissioner (Audit Circle-I) Coimbatore |
||||||||||
18 | Service Tax Rules, 1994 |
Denial of Service Tax Credit availed on outward freight from factory to dumping yard |
4.19 |
2006-2012 |
In the Customs, Excise and Service Tax Appellate Tribunal, Chennai |
||||||||||
19 | Goods and Service Tax Act, 2017 |
Denial of credit on common inputs used in both dutiable and exempted products- Phosphoryl "A" and Phosphoryl "B" |
34.60 |
2017-2018 |
Assistant Commissioner of GST & Central Excise, Coonoor Division |
||||||||||
20 | Service Tax Rules, 1994 |
Wrong availment of PLA balance on Trans-1 |
0.10 |
2017-2018 |
Superintendent of GST & Central Excise, Oot:y |
||||||||||
21 | The Central Excise Act, 1944 |
Cenvat Duty on DCP Clearance Value |
2,325.95 |
2008-2017 |
CESTAT, Ahmedabad |
||||||||||
22 | Goods and Service Tax Act, 2017 |
Input Credit of HO transferred to plants against cross charge |
100.48 |
2017-2019 |
CESTAT, Ahmedabad |
||||||||||
23 | Income Tax |
Additions to Income in assessment proceedings |
3,188.89 |
AY 2006-2007 to 2012-2013 |
ITAT, Mumbai |
||||||||||
24 | Income tax |
Penalty |
2,420.93 |
AY 2006-2007 to 2012-2013 |
CIT (A), Mumbai |
||||||||||
25 | Income Tax |
Additions to Income in assessment proceedings |
70,893.25 |
AY 2013-2014 to 2018-2019 |
CIT (A), Mumbai |
||||||||||
26 | Income Tax |
Interest on 143(3} |
20,513.13 |
AY 2013-2014 to 2016-2017 |
CIT (A), Mumbai |
||||||||||
27 | Income Tax |
Demand raised intimation 143(l)(a} |
75.31 |
AY 2010-2011 |
Central Circle 2(4l, Mumbai |
||||||||||
28 | Income Tax |
Interest on 143(l)(a} |
166.26 |
AY 2010-2011 |
Central Circle 2(4l, Mumbai |
||||||||||
29 | Income Tax |
Demand raised intimation 143(l)(a} |
192.92 |
AY 2011-2012 |
Central Circle 2(4l, Mumbai |
||||||||||
30 | Income Tax |
Demand raised Interest on 143(l)(a} |
199.87 |
AY 2011-2012 |
Central Circle 2(4}, Mumbai |
||||||||||
31 | Custom Duty Act, 1962 |
Advance Licence |
960.60 |
F.Y.2009-1O to F.Y.2010-ll |
Deputy Comm. Of Custom, Nahava Sheva-II, Raigad |
||||||||||
32 | Custom Duty Act, 1962 |
EPCG Licence |
189.77 |
F.Y.2008-09 & F.Y.2009-10 |
Dy. Commissioner of Custom Vadodara |
Against the Sr. No. 23 the company has already paid Rs. 3,130.15 Lakhs to Income Tax Department under Protest and for Balance of Rs. 58.74 lakhs, company has already provided Liability for the same in the Standalone Financial Statements.
Against the Sr. No. 23 and 24 the company has already paid Rs. 824.27 Lakhs to Income Tax Departments under Protest.
Against the Sr. No. 10 the Company has received the notice U/S 32/34/35 of Gujarat Value Added Tax dated March 27, 2019 of Rs. 103.90 Lakhs for the Assessment Year 2014-2015, against which the department on sue moto recovered Rs. 123.93 Lakhs from the Companys Bank Account on June 15, 2020. Against the recovery, the company has filed an appeal with Hon ble National Company Law Tribunal (Mumbai Bench) as the recovery is in violation of Sec 14 of Insolvency and Bankruptcy Code.
Further, Honble NCLT by order dated September 22,2020 has directed the Assistant Commissioner of State Tax to refund the sum of Rs. 123.93 Lakhs to the company. Further company has received mail dated February 5, 2021 from the department stating that they are going to file Appeal against the Order of Honble NCLT dated Sept 22, 2020. The Assistant Commissioner of State Tax has filed Memorandum of Appeal on February 16, 2021 before Honble NCLAT and the said matter is still pending with Honble NCLAT.
** The above figures exclude interest and penalty liability up to the reporting date under various statutes. viii. Previously unrecorded Income
According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not surrendered or disclosed any transactions, previously unrecorded as income in the books of account, in the tax assessments under the Income Tax Act, 1961 as income during the year.
ix. According to the information and explanations given to us and on the basis of our examination of the records of the Company and audit procedure performed:
a. As matters described in Note No. 16 to the Standalone Financial Statements and pursuance of repayment schedule stipulated in the sanction letter, the entire amount of borrowing including interest are overdue and continuing default as on March 31, 2022, therefore, we are unable to provided periods of default.
The details of outstanding amounts as on March 31, 2022 (inclusive of interest) as per books of account, are as given below:
Sr. No. | Bank Name | Type of Facility | Rs.ln Lakhs | |
1 | Union Bank of India (erstwhile Andhra Bank) | Cash Credit | 20,706.80 | |
2 | Bank of Baroda | Cash Credit | 5,893.98 | |
3 | Bank of India | Cash Credit | 822.50 | |
4 | Indian Overseas Bank | Cash Credit | 3,317.83 | |
5 | J M Financial Asset Recon struction Co Ltd . | Cash Credit | 8,889.93 | |
6 | Oriental Bank of Commerce | Cash Credit | 4,545.84 | |
7 | Punjab National Bank | Cash Credit | 12,191.01 | |
8 | State Bank of India | Cash Credit | 4,225.57 | |
9 | Syndicate Bank | Cash Credit | 14,560.04 | |
10 | The Catholic Syrian Bank Ltd | Cash Credit | 2,570.67 | |
11 | UCO Bank | Cash Credit | 1,902.61 | |
12 | Vijaya Bank | Cash Credit | 3,297.00 | |
13 | Allahabad Bank | Cash Credit | 4,522.46 | |
14 | HDFC Bank Derivative Loss | Derivative Loss | 1,655.72 | |
15 | JP Morgan Chess Derivative Loss | Derivative Loss | 6,446.71 | |
16 | State Bank of India-HK | ECB-2009 | 34,806.46 | |
17 | Bank of Baroda (P) | ECB-2010 | 14,968.32 | |
18 | Bank of India Jersey | ECB-2010 | 12,560.61 | |
19 | Indian Overseas Bank HK | ECB-2010 | 8,856.09 | |
20 | Punjab National Bank HK | ECB-2010 | 7,575.23 | |
21 | Punjab National Bank London | ECB-2010 | 5,021.67 | |
22 | Syndicate Bank London | [ 8-2010 | 22,653.19 | |
23 | Uco Bank HK | [(8-2010 | 10,725.80 | |
24 | Uco Bank Singapore | EC8-2010 | 5,381.96 | |
25 | Allahabad Bank Hongkong | ECB 2010 | 583.24 | |
26 | Foreign Currency Convertible Bonds(FCCB) | F CB | 152434.43 | |
27 | LiC-NCD | NCO | 75,348.47 | |
28 | J M Financial Asset Reconstruction Co Ltd | Packing Credit | 1,161.59 | |
29 | Allahabad Bank | Rupee Term Loan | 3,468.61 | |
30 | Allahabad Bank | Rupee Term Loan | 1,213.12 | |
31 | Allahabad Bank | Rupee Term Loan | 3,565.48 | |
32 | Allahabad Bank | Rupee Term Loan | 1,496.33 | |
33 | Allahabad Bank | Rupee Term Loan | 6,612.86 | |
34 | Union Bank of India (erstwhile Andhra Bank) | Rupee Term Loan | 4,771.87 | |
35 | Union Bank of India (erstwhile Andhra Bank) | Rupee Term Loan | 713.41 | |
36 | Bank of Baroda | Rupee Term Loan | 7,083.37 | |
37 | Bank of Baroda | Rupee Term Loan | 1,205.51 | |
38 | Bank of Baroda | Rupee Term Loan | 4,246.26 | |
39 | Bank of India | Rupee Term Loan | 8,56459 | |
40 | Bank of India | Rupee Term Loan | 6,815.29 | |
41 | Indian Overseas Bank | Rupee Term Loan | 37,015.94 | |
42 | Indian Overseas Bank | Rupee Term Loan | 5,080.23 | |
43 | Indian Overseas Bank | Rupee Term Loan | 783.35 | |
44 | Punjab National Bank | Rupee Term Loan | 2,943.36 | |
45 | Punjab National Bank | Rupee Term Loan | 9,838.47 | |
46 | Punjab National Bank | Rupee Term Loan | 6,316.06 | |
47 | Vijaya Bank | Rupee Term Loan | 693.22 | |
48 | UCO Bank | Short Term Loan | 27,554.89 | |
49 | Bank of Maharashtra | Term Loan | 3, 7?8.62 | |
50 | lOBI Bank Ltd. | Term Loan | 6,524.28 | |
51 | J M Financial Asset Reconstruction Co Ltd. | Term Loan | 813.31 | |
52 | The Lakshmi Vilas Bank Ltd. | Term Loan | 1,582.43 | |
53 | UCO Bank | Working Capital Demand Loan | 8,771.68 | |
54 | Undistributed Cut Back Amount to Consortium Bankers | -506.21 | ||
Total As Per Financial Statement | 6,08,592.05 |
We have not been provided latest bank balance statement to verify the o/s balance of the loans as listed above as on March 31, 2022. As per Management, the company is continuously following up with the Banks for the latest balance confirmation and statement of loan.
With Respect to Sr. No. 54 the amount of Rs. 506.21 Lakhs which is Debit balance with the Banks, the details with respect distribution of this amount to consortium Partners is subject to confirmation.
b. The Company has been declared as wilful defaulter by some of the bank or financial institution or government or government authority.
c. As matters described in Note No. 16 to the Standalone Financial Statements, we are unable to comment on the application of term loans availed.
d. On an overall examination of the standalone financial statements of the Company, no funds have been raised on short-term basis during the year.
e. We report that the Company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries as defined under the Companies Act, 2013. Accordingly, clause 3(ix)(e) of the Order is not applicable.
f. We report that the Company has not raised loans during the year on the pledge of securities held in its subsidiaries as defined under the Companies Act, 2013. Accordingly, clause 3(ix)(f) of the Order is not applicable.
x. In respect of moneys raised
a. According to information and explanations given to us, the company did not raise any money through initial public offer or further public offer (including debt instruments) during the year.
b. According to information and explanations given to us, the company has not made any preferential allotment or private placement of shares or fully, partially or optionally convertible debentures during the year.
In view of the above reporting under clause 3 (x) (a) and (b) of the order is not applicable. xi. In respect of fraud noticed or reported
a. To the best of our knowledge and according to the information and explanations given to us, no material fraud by the company or any material fraud on the Company by its officers or employees has been noticed or reported during the year.
Further, the Government of India, Ministry of Corporate affairs has ordered Investigation into the affairs of the Company by Serious Fraud Investigation Office and the Director, SFIO. First Information Report under Sec 154 of The Code of Criminal Procedure, 1973 suspecting criminal conspiracy and abuse of official position during the period 2005-2011 has been filed against Income Tax officers and Directors of the Company. Consequent to investigations by Directorate of Enforcement, a Supplementary Prosecution Complaint has been filed on October 23, 2018 by Assistant Director, Directorate of Enforcement against the Company, its Promoters and others. As the final outcome of all these investigations are pending with various agencies, we are unable to comment on the implication of these frauds on the Standalone Financial Statements of the Company.
b. No report under sub-section (12) of section 143 of the Companies Act has been filed in Form ADT-4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government, during the year.
In view of the above reporting under clause 3 (xi) (b) of the order is not applicable.
c. To the best of our knowledge and according to the information and explanations given to us, the company has not received whistle-blower complaints, during the year.
xii. Nidhi Company
In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company, hence reporting under clause 3 (xii) of the Order is not applicable to the Company
xiii. In respect of transaction with related parties
In our opinion and according to the information and explanations given to us, we are unable to obtain sufficient and appropriate audit evidence to comment whether all transactions with the related parties as disclosed in Note No. 34 to the Standalone Financial Statements are in compliance with section 177 and 188 of Companies Act, 2013. Further, where applicable the details have been disclosed in the Standalone Financial Statements as required by the applicable accounting standards. xiv. Internal Audit
a. In our opinion and according to the information and explanations given to us the company has an internal audit system commensurate with the size and nature of its business.
b. On the basis of the report provided by the management, we have considered the report of the Internal Auditors for the period of the audit.
xv. In respect of non-cash transactions
According to the information and explanation given to us, and to best of our knowledge and belief, the company is under liquidation and is being managed by the liquidator and Board is suspended since commencement of CIRP and later on liquidation proceeding, company had not entered any non-cash transactions with the directors.
xvi. In our opinion and according to the information and explanations given to us:
a. According to the information and explanation given to us, and to best of our knowledge and belief, the company is not required to obtain any registration under Section 4S-IA of the Reserve Bank of India Act, 1934.
b. The company has not conducted any Non-Banking Financial or Housing Finance activities as per the Reserve Bank of India Act 1934;
c. The company is not a Core Investment Company (Cle) as defined in the regulations made by the Reserve Bank of India.
d. The group does not have a Core Investment Company (Cle) as defined in the regulations made by the Reserve Bank of India.
In view of the above, Clause (xvi) (a) (b), (c) and (d) of the Order is not applicable to the Company
xvii. Cash Losses
In our opinion company has not incurred cash losses in the financial year and in the immediately preceding financial year.
xviii. Resignation of statutory auditors
During the year, there has been no resignation of the statutory auditors and accordingly this clause is not applicable. xix. Going Concern
In our opinion and according to the information and explanations given to us, on the basis of the financial ratios, ageing, expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the standalone financial statements, and Note 1 on Material uncertainty relating to Going Concern of our Basis for Disclaimer of Opinion, we are unable to comment on whether the Company will be able to continue as Going Concern.
xx. In respect of Corporate Social Responsibility
In our opinion and according to the information and explanations given to us, there is no unspent amount under sub-section (5) of section 135 of the Act pursuant to any project. Accordingly, clauses 3(xx)(a) and 3(xx)(b) of the Order are not applicable .
xxi. Consolidated Financials Statement
The Company has made investment in unlisted equity shares of group and other companies in and the same has also been impaired in earlier years. In the absence of shareholding details and impairments of investments by the company. We are unable to report on applicability of clauses 3(xxi) of the Order.
For MRB & Associates
Place: Mumbai Date: August 02, 2022
UDIN: 22058431AOCQXU1692
Annexure - B to the Independent Auditors Report
INDEPENDENT AUDITORS REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT, 2013 (THE ACT).
We were engaged to audit the internal financial controls over financial reporting of Sterling Biotech Limited ("the Company") as at and for the year ended March 31, 2022, in conjunction with our audit of Standalone Financial Statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting 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. 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 Companies Act, 2013.
Auditors Responsibility
Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. 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 over financial reporting was established and maintained and if 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 system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, 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 judgment, 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 qualified audit opinion on the Companys internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companys internal financial control over financial reporting 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 control over financial reporting includes 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.
Basis for Disclaimer of Opinion
According to the information and explanations given to us, the Company has not established its internal financial control over financial reporting on criteria based on or 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.
Disclaimer of Opinion
Because of the significance of the matter described in the Basis for Disclaimer Opinion paragraph above and in our main audit report, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion whether the Company had adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively as at March 31, 2022. Accordingly, we do not express an opinion on the Companys internal financial controls over financial reporting.
We have considered the disclaimer reported above in determining the nature, timing, and extent of audit tests applied in our audit of the IND AS financial statements of the Company for the year ended March 31, 2022, and the disclaimer does not affect our opinion on the said IND AS financial statements of the Company.
For MRB & Associates Chartered Accountants,
Firm Registration Number: 136306W
Manish R Bohra
Partner
M. No.: 058431 Place: Mumbai Date: August 02, 2022
UDIN: 22058431AOCQXU1692
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