unichem laboratories ltd share price Auditors report


to the Members of

Unichem Laboratories Limited

To

The Members,

Unichem Laboratories Limited

Report on the Audit of the Standalone Financial Statements

Qualified Opinion

1. We have audited the accompanying standalone financial statements of Unichem Laboratories Limited (“the Company") which comprise the Balance Sheet as at 31st March, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date and a summary of significant accounting policies and other explanatory information (hereinafter referred to as “standalone financial statements”).

2. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph below, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (the “Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (Ind AS) prescribed 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 of the Company as at 31st March, 2023, the loss and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

3. We draw attention to note 38 of the standalone financial statements regarding the EU fine matter and the Companys balance financial exposure (net of impairment of investment of 6,909.36 lakhs) of 5,927.77 lakhs in the subsidiary (Niche Generics Limited, UK) in respect of which in our view, the Company would need to provide for impairment of balance financial exposure of 5,927.77 lakhs. However, the management is of the view that no further provision is required for the balance financial exposure of 5,927.77 lakhs, unless the outcome of EU matter is not in favour of the subsidiary. The impact on the standalone financial statements of including the above provision would be that the Company would show total comprehensive loss for the year of 32,025.29 lakhs and balance in other equity of 2,31,091.17 lakhs as at balance sheet date as against the reported figures of total comprehensive loss for the year of 26,097.52 lakhs and other equity of

2,37,018.94 lakhs. Our audit report on standalone financial statements for the previous year ended 31st March, 2022 was also qualified in respect of this matter.

4. We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) 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 standalone 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 together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our 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 qualified opinion on the standalone financial statements.

Emphasis of Matter Paragraph

5. We draw attention to note 11 of the standalone financial statements in regard to the fair value of unquoted equity investments in Optimus Drugs Private Limited (“Optimus”) and the impact of change in fair value of such investments will be considered in the subsequent period when the audited financial statements of Optimus is available with the Company. Our opinion is not modified in respect of the above matter.

Key Audit Matters

6. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified Opinion, we have determined the matter described below to be the key audit matter to be communicated in our report.

6.1. Impairment test of investment in subsidiary at Ireland

Investments in subsidiaries are carried in the Companys standalone financial statements at cost less impairment. The cost of investment made by the Company in Unichem Laboratories Limited, Ireland as per standalone financial statements is 2,104.84 lakhs as at 31st March, 2023. The subsidiary has accumulated losses, negative net-worth and its current liabilities are higher than

current assets as at balance sheet date. Considering the overall exposure in this subsidiary, need for impairment test is a key audit

matter. For the purpose of our audit, we have considered margins earned by the subsidiary, past trends, discussion with

management for business outlook and subsidiarys auditors report. During the year ended 31st March, 2023, the Company on the basis of abundant precaution has made full provision towards impairment of investment of 2,104.84 lakhs. The management has made this provision after an internal assessment based on circumstances prevailing as at the balance sheet date, such as past

performance, results, accumulated losses and expected cash flows and the same is considered by us for the purpose of our audit

procedures. Refer note 42.2 of standalone financial statements.

Information Other than the Standalone Financial Statements and Auditors Report Thereon

7. The Companys Board of Directors 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 Annexures to Boards Report, Corporate Governance, Business Responsibility and Sustainability Report and Shareholders Information, but does not include the standalone financial statements and our auditors report thereon. Our opinion on the standalone 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 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 standalone 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 the fact. We have nothing to report in this regard.

Managements Responsibility for the Standalone Financial Statements

8. The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, the 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 are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

9. Our objectives are to obtain reasonable assurance about whether the standalone 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 standalone 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 standalone 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 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 the management.

Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the standalone 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 standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone 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 standalone 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 standalone 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

10. As required by the Companies (Auditors Report) Order, 2020 (the "Order") issued by the Central Government of India in terms of Section 143

(11) of the Act, we give in the "Annexure I" a statement on the matters specified in paragraphs 3 and 4 of the Order. 11. As required by Section 143

(3) of the Act, we report that:

a. Except in respect of matter specified in the Basis for Qualified Opinion paragraph above, we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b. Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, 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;

d. Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act;

e. The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may not have an adverse impact on the functioning of the Company;

f. On the basis of the written representations received from the directors as on 31st March, 2023, taken on record by the Board of Directors, none of the directors are disqualified as on 31st March, 2023 from being appointed as a director in terms of Section 164

(2) of the Act;

g. With respect to the adequacy of internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report given in "Annexure II". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting;

h. The qualification relating to the maintenance of accounts and other matters connected therewith are as already stated in the Basis for Qualified Opinion paragraph above;

i. 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: In our opinion and to the best of our 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; and

j. With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer note 37

(A)

(i), 37

(A)

(ii), 37

(B)

(i), 37

(B)

(ii) and 37

(B)

(iii) to the standalone financial statements; i

i. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; ii

i. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company;

iv.

(a) The Management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(b) The Management has represented, that, to the best of its knowledge and belief, no funds have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause

(i) and

(ii) of Rule 11

(e), as provided under

(a) and

(b) above, contain any material misstatement. Also, refer note 60 of the standalone financial statements.

v. As stated in note 18 to the standalone financial statements:

(a) The final dividend proposed in the previous year, declared and paid by the Company during the year is in accordance with Section 123 of the Act.

(b) The Board of Directors of the Company have not proposed final dividend for the year. vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from 1st April, 2023 and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended 31st March, 2023.

For N. A. Shah Associates LLP

Chartered Accountants

Firms Registration No.: 116560W/W100149

Milan Mody

Partner

Membership No.: 103286

UDIN.: 23103286BGPZMC8140

Place: Mumbai

Date: 23rd May, 2023

Annexure I to Independent Auditors Report for the year ended 31st March, 2023

[Referred to point 9 under the heading “Report on other legal and regulatory requirements” of our report of even date]

(i) In respect of Property, Plant and Equipment and Intangible Assets:

(a) (A) The Company has maintained proper records showing full particulars, including quantitative details and situation of

property, plant and equipment and relevant details of right of use assets.

(B) The Company has maintained proper records showing full particulars of intangible assets.

(b) The Company has a program for conducting physical verification to cover all the items of property, plant and equipment and right of use assets in a phased manner which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, assets were physically verified by the management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties which are freehold are held in the name of the Company as at the balance sheet date. This has been verified by checking the original deeds and photocopy of the original deed in respect of one freehold land (since original document is deposited with bank) where confirmation is received from the bank as regards holding the original title deed. In respect of immovable properties of land that have been taken on lease and disclosed as right of use assets in the standalone financial statements, the lease agreements are in the name of the Company as at the balance sheet date.

(d) The Company has not revalued any of its Property, Plant and Equipment (including right of use assets) and intangible assets

during the year.

(e) No proceedings have been initiated or are pending against the Company as on 31st March, 2023 for holding any benami

property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.

(ii) (a) Physical verification of inventory has been conducted at reasonable intervals by the management and in our opinion, the coverage and procedure of such verification by the management is appropriate; discrepancies noticed on verification between the physical stocks and the book records were not material i.e. less than 10% in aggregate for each class of inventory.

(b) The Company has been sanctioned working capital limits in excess of 5 Crores in aggregate from banks on the basis of security, which includes current assets of the Company. The Company has also filed quarterly returns and statements with the bank which are in agreement with the books of account. Refer note 24.1 to the standalone financial statements. Also, there are no borrowings from financial institution.

(iii) (a) In our opinion and according to the information and explanations given to us, during the year the Company has made investments and given guarantees to banks in regard to loan availed by the subsidiary and details of guarantee are given below. Other than the aforesaid, there are no other guarantees, loans or advances in the nature of loan or security to any other companies, firms, limited liability partnerships or any other parties.

Details of guarantees given to bank on behalf of subsidiary:

Amount in EURO Amount in INR*
Particulars
(in lakhs) (in lakhs)
Aggregate amount of guarantees (including renewal) 7.50 672.84
provided during the year
Closing balance of guarantees provided as on 31st March, 2023 30.00 2,691.38

(b) In our opinion, the investments made and guarantees provided, prima facie, are not prejudicial to the Companys interest. The Company has not granted any loans or advances in the nature of loan and given any security. Hence, reporting on clause (iii)(c), (d), (e) and (f) of the Order is not applicable to the Company.

(iv) The Company has complied with the provisions of Section 186 of the Act in respect of the investments made and guarantees provided by the Company. Further, there are no loans or securities given by the Company which are covered under Section 186 of the Act. There are no transactions during the year which are covered under Section 185 of the Act and therefore, the question of commenting on compliance of Section 185 of the Act does not arise.

(v) In our opinion and according to the explanations given to us, the Company has not accepted any deposits or amounts which are deemed to be deposits. Therefore, question of reporting compliance with directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and rules made thereunder does not arise. We are informed that no order relating to the Company has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vi) We have broadly reviewed the books of account and records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 as prescribed by the Central Government for the maintenance of cost records under Section 148(1) of the Act relating to the manufacture of drugs and pharmaceuticals and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate or complete.

(vii) In respect of statutory dues:

(a) According to the information and explanations given to us and on the basis of our examination of records of the Company, in respect of amounts deducted / accrued in the books of account, the Company has been regular in depositing undisputed statutory dues including provident fund, employees state insurance, income-tax, goods and services tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues, as applicable to the Company, during the year with the appropriate authorities except unpaid provident fund contribution of 10.87 Lakhs which will be paid off on linking of aadhar number of certain employees with the provident fund portal. Also refer note 27.2 of the standalone financial statements. Our opinion is not modified in respect of this matter. Other than the above, there are no undisputed statutory dues payable in respect to above statutes, outstanding as at 31st March, 2023, for a period of more than six months from the date they became payable.

(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 disputed sales tax, goods and services tax, service tax, duty of customs, duty of excise and value added tax as on 31st March, 2023, which have not been deposited except the following disputed dues which have not been

deposited since the matters are pending with the relevant forums.

( in Lakhs)

Name of the Statutes

Nature of the dues Disputed amount Amount paid in protest Unpaid amount Period to which it relates Forum where dispute is pending

The Madhya Pradesh Value Added Tax Act, 2002

Entry Tax and Interest 10.94 2.73 8.21 FY 2015-16 Additional Commissioner of Commercial Tax, Indore

The Madhya Pradesh Value Added Tax Act, 2002

Non Submission of Forms including interest 18.46 4.61 13.85 FY 2016-2017 Additional Commissioner of Commercial Tax, Indore

The Madhya Pradesh Value Added Tax Act, 2002

Disallowance of Input tax Rebate 35.97 8.99 26.98 FY 2016-2017 Additional Commissioner of Commercial Tax, Indore

The Madhya Pradesh Value Added Tax Act, 2002

Disallowance of Input tax Rebate 33.28 8.33 24.95 FY 2017-2018 Additional Commissioner of Commercial Tax, Indore

The Finance Act, 1994 (Service Tax)

Disallowance of Service Tax Credit & Penalty 816.82 28.91 787.91 FY 2008-09 to August 2015 Appellate Tribunal (CESTAT) Mumbai

The Finance Act, 1994 (Service Tax)

Disallowance of Service Tax Credit 231.40 16.81 214.59 September 2015 to June 2017 In the process of filing appeal to Commissioner of Central Tax (Appeals)

The Finance Act, 1994 (Service Tax)

Disallowance of Service Tax Credit & Penalty 139.88 5.24 134.64 January 2012 to March 2012 Appellate Tribunal (CESTAT) - Kolkata

The Central Excise Act, 1944

Disallowance of CENVAT Credit 41.42 3.10 38.32 FY 2011-12 to 2012-13 Commissionerate (Appeal) - Siliguri

The Central Excise Act, 1944

Excise Duty Liability 87.95 6.60 81.36 FY 2013-14 to FY 2016-17 Joint Commissioner, CGST & Central Excise, Ujjain

Also, refer note 37(B)(iii) to the standalone financial statements.

(viii) There were no transactions relating to previously unrecorded income that have been surrendered or disclosed as income during

the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961).

(ix) (a) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of loans or borrowings or in the payment of interest thereon to banks during the year. Moreover, there are no borrowings from financial institution or any other lender.

(b) The Company has not been declared wilful defaulter by any bank or financial institution or any other lender.

(c) In our opinion and according to the information and explanations given to us, there are no term loans obtained during the year. Further, outstanding term loan at the beginning of the year was applied for the purpose for which the loan was obtained.

(d) According to the information and explanations given to us, and the procedures performed by us, and on an overall examination of the financial statements of the Company, we report that no funds raised on short-term basis have been used for long-term purposes by the Company. Hence, further reporting under clause 3(ix)(d) of the Order is not applicable to the Company.

(e) According to the information and explanations given to us and on an overall examination of the financial statements of the Company, 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 and its associate. The Company does not have any joint ventures. Hence, further reporting under clause 3(ix)(e) of the Order is not applicable to the Company.

(f) According to the information and explanations given to us and procedures performed by us, we report that the Company has not raised loans during the year on the pledge of securities held in its subsidiaries and its associate. The Company does not have any joint ventures. Hence, further reporting under clause 3(ix)(f) of the Order is not applicable to the Company.

(x) (a) During the year, the Company did not raise any money by way of initial public offer or further public offer (including debt

instruments). Accordingly, clause (x)(a) of the Order is not applicable to the Company.

(b) According to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or convertible debentures (fully or partly or optionally) during the year. Accordingly, clause (x)(b) of the Order is not applicable to the Company.

(xi) (a) No fraud by the Company and no fraud on the Company has been noticed or reported during the year. Accordingly, clause

(xi) of the Order is not applicable to 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 and up to the date of this report.

(c) As represented to us by the management, there are no whistle blower complaints received by the Company during the year.

(xii) The Company is not a Nidhi Company. Accordingly, clause (xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanations given to us and based on our examination of the records, transactions with the related parties are in compliance with Section 177 and 188 of the Act where applicable and the details of such transactions have been disclosed in note 47 of the standalone financial statements as required by the applicable Accounting Standards.

(xiv) (a) In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its

business.

(b) We have considered the internal audit reports for the year under audit, issued to the Company during the year and till the

date of our audit report, in determining the nature, timing and extent of our audit procedures.

(xv) In our opinion and according to the information and explanations given to us, during the year, the Company has not entered into any non-cash transactions with directors or persons connected with the directors. Accordingly, clause (xv) of the Order is not applicable to the Company.

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

Accordingly, clause 3(xvi)(a), (b) and (c) of the Order is not applicable to the Company.

(b) In our opinion, there is no Core Investment Company within the Group (as defined in the Core Investment Companies (Reserve Bank) Directions, 2016) and accordingly, reporting under clause 3(xvi)(d) of the Order is not applicable to the Company.

(xvii) During the current year, the Company has incurred cash loss of 11,518.20 lakhs which is computed after (a) considering the effects of qualification and (b) excluding realised gain on equity instrument which is recognised in ‘Other Comprehensive Income. In the previous year, the Company had incurred cash loss of 2,216.25 lakhs after considering the effects of qualification as mentioned in the previous year qualified audit report.

(xviii) There has been no resignation of the statutory auditors of the Company during the year.

(xix) On the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the financial statements and our knowledge of the Board of Directors and management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report indicating that Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due.

(xx) During the year, there are no unspent amounts towards Corporate Social Responsibility (CSR). Accordingly, reporting under

clause 3(xx)(a) and (b) of the Order is not applicable for the year.

(xxi) The Company has only foreign subsidiaries, hence, reporting under clause 3(xxi) of the Order is not applicable. In case of associate, financial statements are unaudited for the year ended 31st March, 2023 and in the books of the Company, carrying value of investment in associate (net of impairment) is Nil. Further, there were no qualification / adverse remark given by the auditor of associate for the year ended 31st March, 2022.

For N. A. Shah Associates LLP

Chartered Accountants

Firms Registration No.: 116560W/W100149

Milan Mody

Partner

Membership No.: 103286

UDIN.: 23103286BGPZMC8140

Place: Mumbai

Date: 23rd May, 2023

Annexure II to Independent Auditors Report for the year ended 31st March, 2023

[Referred to point 10(g) under the heading “Report on other legal and regulatory requirements” of our report of even date] Report on the Internal Financial Controls under Section 143(3)(i) of the Companies Act, 2013 (the “Act”) Opinion

We have audited the internal financial controls over financial reporting of Unichem Laboratories Limited (“the Company”), as of 31st March, 2023, in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date. In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2023, 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.

Managements Responsibility for Internal Financial Controls

The Companys Board of Directors 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 (the “Guidance Note”), 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 Act.

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”) issued by ICAI and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls with reference to financial statement. 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 standalone 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 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 standalone 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 standalone financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material effect on the standalone financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, 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 over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

For N. A. Shah Associates LLP

Chartered Accountants

Firms Registration No.: 116560W/W100149

Milan Mody

Partner

Membership No.: 103286

UDIN.: 23103286BGPZMC8140

Place: Mumbai

Date: 23rd May, 2023