5. We have determined the matter described below to be the key audit matter to be communicated in our report.
Key audit matters
|
How our audit addressed the key audit matter
|
Provision for non-saleable return
(Refer Note 2.3(l) and 2.3(m) to the accompanying financial statements for material accounting policy information on provision for sales return and Note 17 and 22 for related disclosure)
The revenue of the Company consists primarily of sale of products through various distributions channel who further sells products in the market. Due to the nature of its business, the Company gives right of return to its customers in respect of goods expiring while being in supply chain before reaching end consumers. The amounts pertaining to such sales return are estimated at the time of sale and deducted from revenue and recorded as provisions for sales returns.
|
Our audit procedures relating to provision for non-saleable returns included but were not limited to the following procedures:
• Obtained an understanding of management’s process and evaluated the design and tested the operating effectiveness of the key controls in relation to provision for non-saleable returns;
• Assessed the appropriateness of the Company’s revenue recognition accounting policy including those related to sales return in accordance with applicable accounting standards;
• Obtained management’s calculations for provision for sales return, recalculated the amounts, and evaluated the reasonableness of assumptions used with reference to historical trends of sales returns, level of inventory in distribution channel, shelf life of the products, price change in/new launch of competitive products and other known factors, based on our understanding of the business, past practice, industry trends and forecasts;
|
Key audit matters
|
How our audit addressed the key audit matter
|
These estimates are based on analysis of historical trends of sales return and shelf life of the products along with other known factors that may significantly impact future sales returns. These estimates are complex and requires significant judgement and estimation by the management for establishing an appropriate accrual. The above complexity leads to a risk of revenue being misstated due to inaccurate estimation of such sales return, and hence, it requires significant auditor attention.
The management has accounted for provision for sales returns amounting to ' 206.76 Crores as at March 31, 2025 (including reimbursable sales return amounting to ' 65.26 Crores).
Considering the complexity, significant management estimates and judgments involved, and the significant auditor attention required to test such management’s judgment and estimates, we have identified this as a key audit matter for the current year.
|
• Tested unusual non-standard journal entries based on certain criteria’s which impacts provision for sales return recognized during the year;
• Evaluated management’s estimates in determining the expected sales return by comparing historical accrued provisions to the actual sales returns and assessed whether the methodology followed is consistent with previous year;
• Performed substantive testing on selected samples of credit notes issued to the customers by testing relevant approvals and underlying supporting documents;
• T ested the workings in respect of classification of current and non-current provisions for sales return prepared by the management including the underlying assumptions; and
• Assessed the appropriateness and adequacy of disclosures made in financial statements in accordance with applicable accounting standards.
|
1. We have audited the accompanying financial statements of Abbott India Limited (‘the Company’), which comprise the Balance Sheet as at March 31, 2025 the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including material accounting policy information and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 (‘the Act’) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (‘Ind AS’) specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2025 and its Profit (including Other Comprehensive Income), its Cash Flows and the Changes in Equity for the year ended on that date.
BASIS FOR OPINION
3. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (‘ICAI’) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
KEY AUDIT MATTER
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR’S REPORT THEREON
6. The Company’s Board of Directors are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditor’s report thereon. The Annual Report is expected to be made available to us after the date of this auditor’s report.
Our opinion on the financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
7. The accompanying financial statements have been approved by the Company’s Board of Directors. The Company’s Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation and presentation of these financial statements that give a true and fair view of the financial position, financial performance including Other Comprehensive Income, Changes in Equity and Cash Flows of the Company in accordance with the Ind AS specified under Section 133 of the Act and other 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 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
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 Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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 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; and
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
12. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
13. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
14. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
8. In preparing the financial statements, the Board of Directors is 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
9. The Board of Directors is also responsible for overseeing the Company’s financial reporting process.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
10. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
11. As part of an audit in accordance with Standards on Auditing, specified under Section 143(10) of the Act we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act we are also responsible for expressing our opinion
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.
OTHER MATTER
15. The financial statements of the Company for the year ended March 31, 2024 were audited by the predecessor auditor, S R B C & CO LLP, who have expressed an unmodified opinion on those financial statements vide their audit report dated May 09, 2024.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
16. As required by Section 197(16) of the Act, based on our audit, we rep ort that the C ompany has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under Section 197 read with Schedule V to the Act.
17. As required by the Companies (Auditor’s 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 A a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
18. Further to our comments in Annexure A, as required by Section 143(3) of the Act based on our audit, we report, to the extent applicable, that:
a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit of the accompanying financial statements;
b) Except for the matters stated in paragraph 18(h)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended), 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. Further, the back-up of the books of accounts and other books and papers of the Company maintained in electronic mode has been maintained on servers physically located in India, on a daily basis except for an application used for processing expenses of field employees where backup taken on daily basis were kept on a server physically located outside India as stated in Note 46(i) to the financial statements;
c) The financial statements dealt with by this report are in agreement with the books of account;
d) In our opinion, the aforesaid financial statements comply with Ind AS specified under Section 133 of the Act;
e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2025 from being appointed as a director in terms of Section 164(2) of the Act;
f) The modification relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph 18(b) above on reporting under Section 143(3)(b) of the Act and paragraph 18(h)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended);
g) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company as on March 31, 2025 and the operating effectiveness of such controls, refer to our separate report in Annexure B wherein we have expressed an unmodified opinion; and
h) 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 (as amended), in our opinion and to the best of our information and according to the explanations given to us:
i. The Company, as detailed in Note 37 to the financial statements, has disclosed the impact of pending litigations on its financial position as at March 31, 2025;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at March 31, 2025;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended March 31, 2025;
iv. a. The management has represented that, to the
best of its knowledge and belief, as disclosed in Note 45(iii) to the financial statements, no funds have been advanced or loaned or
invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person(s) or entity(ies), including foreign entities (‘the 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 (‘the Ultimate Beneficiaries’) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;
b. The management has represented that, to the best of its knowledge and belief, as disclosed in Note 45(iv) to the financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (‘the 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; and
c. Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under sub¬ clauses (a) and (b) above contain any material misstatement.
v. The final dividend paid by the Company during
the year ended March 31, 2025 in respect of such dividend declared for the previous year is in accordance with Section 123 of the Act to the extent it applies to payment of dividend.
As stated in Note 15 to the accompanying financial statements, the Board of Directors of the Company have proposed final dividend for the year ended March 31, 2025 which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with Section 123 of
the Act to the extent it applies to declaration of dividend.
vi. As stated in Note 46(ii) to the financial statements and based on our examination which included test checks, except for instance mentioned below, the Company, in respect of financial year commencing on or after April 1, 2024 has used an accounting software for maintaining its books of account which have a feature of recording audit trail (edit log) facility and the same have been operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with other than the consequential impact of the exception given below. Furthermore, except for instance mentioned above, the audit trail has been preserved by the Company as per the statutory requirements for record retention.
For Walker Chandiok & Co LLP
Chartered Accountants
Firm’s Registration No.: 001076N/N500013
Ashlsh Gupta
Partner
Membership No.: 504662 UDIN: 25504662BMOOEW3189
Place : Mumbai Date : May 15, 2025
Nature of exception noted
|
Details of Exception
|
Instances of
|
The audit trail
|
accounting software
|
feature was not
|
for maintaining
|
enabled at the
|
books of account for
|
database level for
|
which the feature
|
accounting software
|
of recording audit
|
to log any direct data
|
trail (edit log) facility
|
changes, used for
|
was not operated
|
maintenance of all
|
throughout the
|
accounting records
|
year for all relevant transactions recorded in the software
|
by the Company.
|
|