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BSE: 500257ISIN: INE326A01037INDUSTRY: Pharmaceuticals

BSE   ` 751.25   Open: 762.00   Today's Range 733.85
762.00
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963.00
Year End :2019-03 

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the standalone financial statements of Lupin Limited (“the Company”), which comprise the standalone balance sheet as at 31 March, 2019, and the standalone statement of profit and loss (including other comprehensive income), the standalone statement of changes in equity and the standalone statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to “the standalone financial statements”).

In our opinion and to the best of our information and according to the explanations given to us, 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 accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March, 2019, and profit and other comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor’s 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 other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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.

Key audit matter description

How the matter was addressed in audit

1. Revenue Recognition:

Refer note 1B(k) of accounting policy and note 39 in

Our audit procedures in respect of the recognition of revenue

standalone financial statements.

included the following:

The Company recognises revenue from the sales of

- Assessing the appropriateness of the policies in respect

pharmaceutical products when control over goods is

of revenue recognition by comparing with applicable

transferred to a customer. The actual point in time when

accounting standards;

revenue is recognised varies depending on the specific terms and conditions of the sales contracts entered into with

- Evaluating the design, testing the implementation and

customers. The Company has a large number of customers

operating effectiveness of the Company’s internal controls

operating in various geographies and sales contracts with

including general IT controls and key IT application controls

customers have a variety of different terms relating to

over recognition of revenue and measurement of rebates,

the recognition of revenue, the right of return and price

discounts, returns;

adjustments.

- Performing substantive testing (including year-end cut

We identified the recognition of revenue from sale of products

off testing) by selecting samples of revenue transactions

as a key audit matter because

recorded during and after the year and verifying the

- Revenue is a key performance indicator of the Company

underlying documents, which included sales invoices/ contracts and dispatch/shipping documents. Obtaining

and there is risk of revenue being overstated due to

and assessing appropriateness of positions for returns and

fraud resulting from pressure to achieve targets, earning

rebates. Performing retrospective review to identify any

expectations or incentive schemes linked to performance for

management bias;

a reporting period.

- Establishing an appropriate accrual towards rebate, discount,

- Reviewing the terms of the research and development/ licensing arrangements to determine whether the rights

returns and allowances requires significant estimation on the

transferred under the contract qualified for revenue

part of management and change in this estimates can have a

recognition having regard to the remaining performance

significant financial impact.

obligations under the Contract and assessing whether

appropriate proportion of revenue is deferred in respect of ongoing performance obligations. Testing controls over review of contracts and revenue recognition;

Key audit matter description

How the matter was addressed in audit

The Company routinely enters into development and commercialization arrangements relating to research and development of new products in the pharmaceutical sector including collaboration with other pharmaceutical companies. This includes in-licensing and out-licensing arrangements and other types of complex agreements. The nature of these arrangements are often inherently complex and unusual requiring management judgment to be applied in respect of revenue recognition. Considering the extent of estimation and judgment involved, recognition of revenue from such contracts has also been considered as key audit matter.

- Assessing manual journals posted to revenue to identify unusual items not already covered by our audit testing;

- Evaluating the adequacy of the standalone financial statement disclosures, including disclosures of key assumptions, judgments and sensitivities; and

- Evaluating adequacy of disclosures given in Note 39 to standalone financial statements.

2.

Investment in Subsidiaries and Joint Venture:

The carrying value of investment in subsidiaries and a joint venture (JV) as at 31 March 2019 is Rs. 51,247.3 millions.

These investments are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If such evidence exists, impairment loss is determined and recognised in accordance with note 1B(h) of accounting policies to the standalone financial statements.

We identified the assessment of impairment indicators and resultant provision, if any, in respect of investment in subsidiaries/joint venture as a key audit matter because of.

The significance of the amount of these investments in the Standalone Balance Sheet.

Performance and net worth of these entities and

The degree of management judgement involved in determining the recoverable amount of these investments including:

Our audit procedures in respect of impairment of investment in

subsidiaries and JV included the following:

- Testing design, implementation and operating effectiveness of key controls over the impairment review process including the review and approval of forecasts and review of valuation models;

- Assessing the valuation methodology used by management and management review control is around making the assessment and testing the mathematical accuracy of the impairment models;

- Evaluating the reasonableness of the valuation assumptions, such as discount rates, used by management through reference to external market data;

- Challenging the appropriateness of the business assumptions used by management, such as sales growth, cost and the probability of success of new products;

- Evaluating past performances where relevant and assessed historical accuracy of the forecast produced by management;

- Valuation assumptions, such as discount rates.

- Business assumptions used by management, such as sales growth and costs and the resultant cash flows projected to be generated from these investments.

- Enquiring and challenging management on the commercial strategy associated with the products to ensure that it was consistent with the assumptions used in estimating future cash flows;

- Considering whether events or transactions that occurred after the balance sheet date but before the reporting date affect the conclusions reached and the associated disclosures; and

- Performing sensitivity analysis of key assumptions, including future revenue growth rates, costs and the discount rates applied in the valuation models.

3.

Intangible Assets:

The carrying value of Intangible Assets including IP R&D aggregate to Rs. 6,010.2 million as at 31 March 2019. These assets are evaluated for any indicators of impairment annually. Refer note no. 1B(f) of accounting policies in respect of impairment.

We assessed the appropriateness of the carrying value of the intangible assets by performing the following audit procedures:

- Testing design, implementation and operating effectiveness of key controls over the impairment review process including the review and approval of forecasts and review of valuation models;

Management performs the annual assessment of the intangible assets including IP R&D, at each cash generating unit (CGU) level, to identify any indicators of impairment. The recoverable amount of the CGUs which is based on the higher of the value in use or fair value less costs to sell, has been derived from discounted forecast cash flow models. These models use several key assumptions, including estimates of future sales volumes, prices, operations costs, terminal value growth rates the impact of the expiry of patents on the product and potential product obsolescence and the weighted average cost of capital (discount rate).

Considering the inherent uncertainty, complexity and management judgment involved and the significance of the value of the assets, impairment assessment of intangible assets has been considered as a key audit matter.

- Assessing the valuation methodology used by management and management review control is around making the assessment and testing the mathematical accuracy of the impairment models;

- Assessing management’s identification of CGUs with reference to the guidance in the applicable accounting standards;

- Evaluating the reasonableness of the valuation assumptions, such as discount rates, used by management through reference to external market data;

- Challenging the appropriateness of the business assumptions used by management, such as sales growth and the probability of success of new products;

Key audit matter description

How the matter was addressed in audit

- Evaluating past performances where relevant and assessed historical accuracy of the forecast produced by management;

- Enquiring and challenging management on the commercial strategy associated with the products to ensure that it was consistent with the assumptions used in estimating future cash flows;

- Considering whether events or transactions that occurred after the balance sheet date but before the reporting date affect the conclusions reached on the carrying values of the assets and associated disclosures; and

- Performing sensitivity analysis of key assumptions, including future revenue growth rates, costs and the discount rate applied in the valuation models.

4. Uncertain tax positions: (UTPs)

With the support of tax specialists, we assessed the appropriateness of the provisions for UTPs and carrying value of

The Company operates in numerous tax jurisdiction with

deferred tax assets by performing the following audit procedures;

various tax exemptions available across regions which are

subject to periodic challenges by local tax authorities leading

- Testing the design and operating effectiveness of the

to protracted litigations. There are a number of open tax and

Company’s controls over provisions for current tax, deferred

transfer pricing matters under litigation with tax authorities

tax and uncertain tax positions;

over a number of years.

- Assessing and challenging the completeness of UTPs in

The range of possible outcomes for provisions and

conjunction with our internal tax specialists by considering

contingencies can be wide and management is required

changes to business and tax legislation in key jurisdictions

to make certain judgement in respect of estimates of tax

by having discussions with management and review of

exposures and contingencies in order to assess the adequacy

correspondence with authorities where relevant;

of tax provision.

- Assessing and challenging the calculation for the current

Provision for current tax, valuation of UTPs and recognition

tax provision and the procedures performed to analyse

of deferred assets/liabilities have been identified as a key

movements including the rationale for any release, increase

audit matter due to the inherent level of complexity in the

or continued provision in the year;

underlying tax laws and the extent of management judgement

involved in developing these estimates. These matters are

- Assessing and challenging management’s judgements

disclosed in note 46 to the standalone financial statements.

regarding the recoverability of temporary differences

Refer note 1B(i) in significant accounting policies.

pertaining to deferred tax balances by obtaining and critically examining the forecasts and demonstrating the expected

Total tax related liabilities carried in the books aggregate

utilization of key temporary differences in order to assess

to Rs. 2662.2 million (Deferred tax liability) and Rs. 66.1 million

their recoverability;

(Current tax liability).

- Assessing and challenging management’s judgments with respect to probability of outflow arising out of litigation after considering the status of recent tax assessments, audits and enquiries, recent judicial pronouncements and judgments

in similar matters, developments in the tax environment and outcome of past litigations. We focused our work on the jurisdictions with greatest potential exposure involving higher level of judgements;

- Involving transfer pricing specialists to review the transfer pricing methodology of the group and associated approach to provisioning; and

- Evaluating adequacy of disclosures given in Note 46 to standalone financial statements.

Other Information

The Company’s management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company’s annual report, but does not include the 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 in the 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.

Management’s Responsibility for the Standalone Financial Statements

The Company’s management and Board of Directors are 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 state of affairs, profit/loss and other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statement 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, management and Board of Directors are responsible for assessing the Company’s 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.

Board of Directors is also responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Standalone Financial Statements

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 auditor’s 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 Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

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

- Conclude on the appropriateness of management’s 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 auditor’s 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 auditor’s 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.

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 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

1) As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”), issued by the Central Government in terms of sub-section (11) of section 143 of the Act, 2013, we give in the “Annexure A” statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

(A) As required by Section 143(3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c) The standalone balance sheet, the standalone statement of profit and loss (including other comprehensive income), the standalone statement of change in equity and the standalone cash flow statement dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31 March, 2019, taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2019 from being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”.

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

i. The Company has disclosed the impact of pending litigations as at 31 March 2019 on its financial position in its standalone Financial statements - Refer Note 36 to the standalone financial statements;

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

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

iv. The disclosures in the standalone financial statements regarding holdings as well as dealings in specified bank notes during the period from 8 November 2016 to 30 December 2016 have not been made in these financial statements since they do not pertain to the financial year ended 31 March, 2019.

(C) With respect to the matter to be included in the Auditor’s Report under section 197(16):

In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under section 197(16) which are required to be commented upon by us.

Annexure A to the Independent Auditor’s Report - 31 March 2019

(Referred to our report of even date)

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets.

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

(c) According to the information and explanations given to us and based on the examination of the registered sale deed / transfer deed / conveyance deed / share certificate / other documents evidencing title and provided to us, we report that the title deeds of immovable properties of land and building which are freehold, as disclosed in Note 2 to the standalone financial statements, are held in the name of the Company, except for the following:

(Rs. in million)

Particulars of the land and building

Gross Block (As at 31.03.2019)

Net Block (As at 31.03.2019)

Remarks

Freehold land located in Maharashtra admeasuring 7 Hectare and 70.91 Acre

29.6

29.6

The title deeds are in the name of the erstwhile company that was amalgamated with the Company pursuant to the Scheme of amalgamation sanctioned by the Hon’ble Bombay High Court

Freehold building located in Maharashtra admeasuring 8038 sqft

133.9

91.3

The title deeds are in the name of erstwhile company that was amalgamated with the Company pursuant to the Scheme of amalgamation sanctioned by the Hon’ble Bombay High Court

In respect of immovable properties of land and buildings that have been taken on lease and disclosed as fixed asset in Note 2 to the standalone Ind AS financial statements, the lease agreements are in the name of the Company, where the Company is the lessee in the agreement, except the following:

(Rs. in million)

Particulars of the building

Gross Block (As at 31.03.2019)

Net Block (As at 31.03.2019)

Remarks

Leasehold building located in Delhi admeasuring 1628 sqft

2.8

2.3

The title deeds are in the name of erstwhile company that was amalgamated with the Company pursuant to the Scheme of amalgamation sanctioned by the Hon’ble Bombay High Court

In respect of immovable properties of land and buildings which are disclosed as fixed asset in the standalone Ind AS financial statements, the original documents for the following assets are not available for verification.

(Rs. in million)

Particulars of the land and building

Gross Block (As at 31.03.2019)

Net Block (As at 31.03.2019)

Building located in Maharashtra

7.5

5.1

Land located in Uttarakhand

0.3

0.3

(ii) Inventories, apart from goods in transit and inventories lying with third parties, have been physically verified by the Management during the year and the discrepancies noticed on such verification between the physical stock and book records were not material. In our opinion, the frequency of such verification is reasonable. Inventories lying with third parties have been substantially confirmed by them as at the year-end and no material discrepancies were noticed in respect of such confirmations.

(iii) According to information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013 (‘the Act’). Accordingly, paragraph 3(iii) of the Order is not applicable to the Company.

(iv) According to the information and explanation given to us, the Company has complied with the provisions of Section 185 and 186 of the Act, in respect of the investments made and guarantees provided, as applicable. The Company has not granted any loans or provided any security to the parties covered under Section 185 and 186 of the Act.

(v) According to the information and explanations given to us, the Company has not accepted any deposits as per the directives issued by the Reserve Bank of India under the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Accordingly, paragraph 3(v) of the Order is not applicable to the Company.

(vi) We have broadly reviewed the records maintained by the Company pursuant to the rules prescribed by Central Government for maintenance of cost records under Section 148 (1) of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident fund, Employees’ state insurance, Income tax, duty of Customs, Goods and Service tax, Cess and other material statutory dues have generally been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident fund, Employees’ state insurance, Income tax, duty of Customs, Goods and Service tax, Cess and other material statutory dues were in arrears as at 31 March 2019 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Income tax, Sales Tax, Value added tax, Service tax, duty of Customs, duty of Excise, Goods and Service tax and Cess which have not been deposited with the appropriate authorities on account of any dispute other than those mentioned in Annexure I to this report.

(viii) According to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowings to banks or government.

The Company has not taken any loans or borrowings from financial institutions and has not issued any debentures during the year.

(ix) The Company has not raised any money by way of initial public offer, further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3(ix) of the Order is not applicable to the Company.

(x) During the course of our examination of the books and records of the company, carried out in accordance with generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such cases by the Management.

(xi) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us, the Company is not a Nidhi company and the Nidhi Rules, 2014 are not applicable to it. Accordingly, paragraph 3(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 of the Company, transactions with related parties are in compliance with the provisions of Sections 177 and 188 of the Act, where applicable. The details of such related party transactions have been disclosed in the standalone Ind AS financial statements as required under Indian Accounting Standard (Ind AS) 24, Related Party Disclosures specified under Section 133 of the Act read with the relevant rules issued thereunder.

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

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with its directors or persons connected with them. Accordingly, paragraph 3(xv) of the Order is not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, paragraph 3 (xvi) of the Order is not applicable to the Company.

Annexure - I to the Independent Auditor’s Report - 31 March 2019

Amounts of dues of Income tax, sales tax, Value added tax, Service tax, duty of Customs, duty of Excise, Goods and Service tax which have not been deposited with the appropriate authorities on account of any dispute.

Name of the Statute

Nature of Dues

Forum where dispute is pending

Period to which amount relates

Amount

demanded

Amount

unpaid

(Rs. million)

(Rs. million)

Income tax Act, 1961

Income tax

Commissioner of Income tax (Appeals)

2004-2016

1,818.5

1,164.9

Central Excise Act, 1944

Excise duty Debonding matters

Customs, Excise, and Service Tax Appellate Tribunal (CESTAT)

2010 & 2012

371.1

Excise duty -Others

Customs, Excise, and Service Tax Appellate Tribunal (CESTAT)

Various

64.8

48.3

Excise duty -Others

Commissioner

Various

102.4

102.4

Excise duty -Others

Joint Commissioner

2005-06

10.0

10.0

Excise duty -Others

Additional Commissioner

2001-04

7.7

7.7

Excise duty -Others

Assistant Commissioner

2004-05

2011

2017-18

14.5

14.5

Excise duty -Others

High Court

2005 to 2007

12.9

12.9

Service Tax Matters

Customs, Excise and Service Tax Appellate Tribunal (CESTAT)

2005-08

55.1

55.1

Service Tax Matters

Commissioner

2005-08

7.4

7.4

Service Tax Matters

High Court

2005-06

22.2

22.2

Goods and Service tax, Central and various States’ Sales Tax Acts and various States’ Value Added Tax Acts

Goods and Service tax, Sales tax, Value added tax,

Sales Tax Tribunal

2000-01

2003-06

2009-11

32.4

26.7

Supreme Court

2000-01

0.5

0.5

High Court

2002-03

2004-05

11.6

5.3

Commissioner of Sales Tax (Appeal)

2002-03

2004-05

2005-09 2014-15 2018-19

8.5

7.8

Joint Commissioner

2001-04

2005-06

2013-14

2015-16

16.9

9.5

Deputy Commissioner

1994-95

2000-01

2012-14

7.0

7.0

Additional Commissioner

1994-95

2010-11

2012-13

2015-16

18.1

15.6

Commercial Tax Officer

2014-15

0.02

0.02

Assistant Commissioner

2003-04

0.3

-

The Customs Act 1962

Customs duty

Customs, Excise and Service Tax Appellate Tribunal (CESTAT)

2010-2011

0.8

0.8

Annexure B to the Independent Auditor’s report on the standalone financial statements of Lupin Limited for the year ended 31 March 2019

Report on the internal financial controls with reference to the aforesaid standalone financial statements under section 143(3)(i) of the Companies Act, 2013

(Referred to in paragraph 2(f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

Opinion

We have audited the internal financial controls with reference to financial statements of Lupin Limited (“the Company”) as oRs.31 March 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

In our opinion, the Company has, in all material respects, an adequate internal financial control system with reference to financial statements and such internal financial controls were operating effectively as at 31 March 2019, based on the internal financial controls with reference to financial statements criteria established by the Company considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (the “Guidance Note”).

Management’s Responsibility for Internal Financial Controls

The Company’s management and the Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note.

These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Company’s 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 (hereinafter referred to as “the Act”).

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements were established and maintained and whether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of such internal financial controls, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, 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 Company’s internal financial controls with reference to financial statements.

Meaning of Internal Financial Controls with reference to Financial Statements

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

Inherent Limitations of Internal Financial Controls with reference to financial statements

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

For B S R & Co. LLP

Chartered Accountants

Firm Registration No. 101248W/W - 100022

Venkataramanan Vishwanath

Place: Mumbai Partner

Date: May 15, 2019 Membership No. 113156