We have audited the standalone financial statements of Biocon Limited
(the ‘Company"), its Employee Welfare Trusts ("Trust") which comprise
the standalone balance sheet as at 31 March 2025, and the standalone
statement of profit and loss (including other comprehensive income),
standalone statement of changes in equity and standalone statement of
cash flows for the year then ended, and notes to the standalone financial
statements, including material accounting policies and other explanatory
information (herein referred to as 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 (‘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 2025, and its 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 on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the 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.
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Impairment assessment of long term investments in subsidiaries
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See Note 6 and 2(a) to standalone financial statements
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The key audit matter
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How the matter was addressed in our audit
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The Company has long term investments in subsidiaries aggregating to
Rs. 113,496 million as at 31 March 2025. The Company accounts for these
investments at cost less any provision for impairment loss. Changes in the
business environment, including market or economic environment and
general inflationary trend could have significant impact on the valuation of
these investments. Investments where an indication based on these factors
exist, are tested for impairment at the end of the reporting period.
The Company determines the recoverable value of such investments and
compares it to the carrying value if there are indicators of impairment. The
recoverable value is the higher of the market value or the Value in Use (VIU).
The recoverable value is determined using the following assumptions:
• projected future cash inflows
• expected growth rate, discount rate, terminal growth rate
• comparison of price and market multiples
The assessment of discount rate and terminal growth rate requires
specialized skills and knowledge. Changes in these assumptions, could
impact the recoverable value of the investments Further, these significant
assumptions are forward looking and could be affected by future economic
and market conditions. The impairment testing is significant to our audit,
because of the materiality of the investments as well as the involvement
of estimates and judgements.
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Our audit procedures to obtain sufficient audit evidence included:
• Assessed the design, implementation and operating effectiveness
of the relevant key controls in respect of company's e impairment
assessment process, including approval of forecasts and valuation
models;
• Performed a retrospective analysis to assess the reasonableness of
Company's projections by comparing historical forecast to actual
results;
• Evaluated the reasonableness of the overall impairment model
including assumptions by involving valuation specialist and comparing
these inputs with externally available data, consistency with Board
approved forecasts and knowledge of the industry and verified overall
mathematical accuracy of calculations;
• Performed sensitivity analysis of key assumptions. These include future
revenue growth rates, terminal growth rate and discount rate applied
in the valuation.
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Going concern
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See Note 1.2 to standalone financial statements
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The key audit matter
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How the matter was addressed in our audit
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In respect of agreements entered into by the Company with certain financial
investors for acquisition of biosimilar business by its subsidiary, there are
put option obligations on the Company to provide exit to the investors.
The Company also has certain long-term borrowings that carry drag along
rights which require the Company to repay the debts if the put options,
as mentioned above, are triggered. As at 31 March 2025, these contractual
agreements indicate possible obligations as described in note 34(ii) to the
financial statements.
Management assessed its financial position as at 31 March 2025, its forecasts
for the period of fifteen months from the date of these financial statements,
its ability to re-negotiate the exit terms with investors, ability to raise funds
by issuance of further shares as stated in note 46(b) to the standalone
financial statements and support liquidity from its non-current assets.
These factors involve subjectivity considering the fact that some of these
are driven by external environment and hence outcomes could be different
from those factored by the Company. Considering the significance of this
issue it is considered as a Key Audit Matter.
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Our audit procedures to assess the going concern assumption included the
following:
• Obtained the forecasted cashflows prepared by the Management for
the next 15 months and examined the basis and details supporting
the estimations considered therein;
• Evaluated the reasonability of the cash flow forecast including
assumptions by comparing these inputs with available data,
consistency with Board approved forecasts and knowledge of the
industry and verified overall mathematical accuracy of calculations;
• Performed sensitivity analysis on the forecasted cash flows by
considering plausible changes to the key assumptions;
• Discussed with Audit Committee and key senior management
personnel regarding the Company's plan to meet the obligations;
• Assessed the adequacy of the disclosures - refer note 1.2 to the
financial statements.
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Taxation
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See Note 2(m), 33 and 34 to standalone financial statements
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The key audit matter
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How the matter was addressed in our audit
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The Company's tax provision involves complexities & judgements with
respect to various tax positions including the following:
- deductibility of transactions
- availability of tax incentives and exemptions for earlier years, ,
- Uncertainty in a tax position that may arise as tax laws are subject to
interpretation.
Judgment is required in assessing the range of possible outcomes for some
of these tax matters. These judgments could change over time as each of
the matters progresses depending on experience on actual assessment
proceedings by tax authorities and other judicial precedents.
The Company makes an assessment (including obtaining opinion from
external legal experts) to determine the outcome of these uncertain tax
positions and decides to make an accrual or consider it to be a possible
contingent liability. Where the amount of tax liabilities are uncertain, the
Company recognizes accruals which reflect its best estimate of the outcome
based on the facts known. Accordingly, this was an area of focus for the
engagement team during the audit for the year ended 31 March 2025.
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Our audit procedures in relation to Taxation include the following:
• We tested the design and operating effectiveness of the Company's
controls around the tax computation and tax matters;
• We obtained an understanding of the key uncertain tax positions
based on list of ongoing litigations and tax computations for the
current year;
• We reviewed the tax demand / assessment orders and anlaysed the
implications of observation ns in those orders to identify any
additional uncertain tax positions;
• We analysed the Company's judgment regarding the eventual
resolution of matters with various tax authorities. In this regard, we
understood how the Company has considered past experience, where
available, with the tax authorities in the respective jurisdictions;
• We also reviewed external legal opinions and consultations made by
the Company for key tax matters during current and past periods; and
• We involved tax specialists to assist us in evaluating the technical merits
of tax position to form a judgement and the key assumptions made by
the Company in tax computations and assessing the adequacy of the
Company's disclosures in respect of contingent liabilities and provision
for tax matters.
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Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Management and Board of Directors are responsible for the other information. The other information comprises the information included
in the Management Board's Report, Management Discussion and Analysis, Corporate Governance Report and Business Responsibility Report, but does not
include the financial statements and auditor's report thereon, which we obtained prior to the date of this auditor's report, and the remaining sections of the
Company's Annual Report, which are expected to be made available to us after that date.
Our opinion on the standalone financial statements does not cover the
other information and we do not and will 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 identified above 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 on the other information that we
obtained prior to the date of this auditor's report, we conclude that there is
a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
When we read the other sections of the Annual Report (other than those
mentioned above), if we conclude that there is a material misstatement
therein, we are required to communicate the matter to those charged with
governance and take necessary actions, as applicable under the applicable
laws and regulations.
Management's and Board of Directors'/Board of Trustees'
Responsibilities 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. The respective
Management and Board of Directors of the company/Board of Trustees of
the Trust are responsible for maintenance of adequate accounting records
in accordance with the provisions of the Act for safeguarding of the assets
of the Company/Trust 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 respective
Management and Board of Directors/Board of Trustees are responsible for
assessing the ability of the Company/Trust to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the respective Board of Directors/
Board of Trustees either intends to liquidate the Company/Trust or to cease
operations, or has no realistic alternative but to do so.
The respective Board of Directors/Board of Trustees are responsible for
overseeing the financial reporting process of the Company/Trust.
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)0) 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 the Management and Board of Directors.
• Conclude on the appropriateness of the Management and Board of
Directors use of the going concern basis of accounting in preparation
of standalone financial statements 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 of the Company
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 auditor's 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, 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.
2 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 except for the matters
stated in the paragraph 2B(f) below on reporting under
Rule 11(g) of the Companies (Audit and Auditors) Rules,
2014.
c. The standalone balance sheet, 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 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 1 April 2025 and 3 April 2025 taken on
record by the Board of Directors, none of the directors is
disqualified as on 31 March 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 the
paragraph 2A(b) above on reporting under Section 143(3)
(b) and paragraph 2B(f) below on reporting under Rule
11(g) of the Companies (Audit and Auditors) Rules, 2014.
g. 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
a. The Company has disclosed the impact of pending
litigations as at 31 March 2025 on its financial position in
its standalone financial statements - Refer Note 34 to the
standalone financial statements.
b. The Company has made provision, as required under
the applicable law or accounting standards, for material
foreseeable losses, if any, on long-term contracts including
derivative contracts - Refer Note 36 to the standalone
financial statements.
c. There has been no delay in transferring amounts, required
to be transferred, to the Investor Education and Protection
Fund by the Company.
d (i) The management of the Company represented to
us that, to the best of its knowledge and belief, as
disclosed in the Note 43 to the standalone financial
statements, 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(s) or entity(ies),
including foreign entities ("Intermediaries"), with
the understanding, whether recorded in writing or
otherwise, that the Intermediary shall 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.
(ii) The management of the Company represented
to us that, to the best of its knowledge and belief,
as disclosed in the Note 43 to the standalone
financial statements, no funds have been received
by the Company from any person(s) or entity(ies),
including foreign entities ("Funding Parties"), with
the understanding, whether recorded in writing
or otherwise, that the Company shall directly or
indirectly, lend or invest in other persons or entities
identified in any manner whatsoever by or on behalf
of the Funding Parties ("Ultimate Beneficiaries") or
provide any guarantee, security or the like on behalf
of the Ultimate Beneficiaries.
(iii) 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 (i) and (ii) above, contain any material
misstatement.
?. The final dividend paid by the Company during the year,
in respect of the same 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 46(a) to the standalone financial
statements, the Board of Directors of the Company has
proposed final dividend for the year 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.
. Based on our examination which included test checks, the
Company has used an accounting software for maintaining
its books of account which has a feature of audit trail (edit
log) facility and the same has operated throughout the year
for all relevant transactions recorded in the software except
that the audit trail was not enabled (i) at the database level
for the period from 1 April 2024 to 24 October 2024. Also,
for one database user, the audit trail was not enabled for
the period from 1 April 2024 to 25 February 2025; (ii) at the
application level for certain fields / tables relating to all the
significant processes and (iii) for certain changes at the
application level which were performed by users having
privileged access rights.
Further, for the periods where audit trail (edit log) facility
was enabled and operated, we did not come across
any instance of audit trail feature being tampered with.
Additionally, except where the audit trail was not enabled
in the previous year, the audit trail has been preserved by
the Company as per the statutory requirements for record
retention.
C. With respect to the matter to be included in the Auditor's Report
under Section 197(16) of the Act:
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
by the Company 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) of the Act which
are required to be commented upon by us.
For B S R & Co. LLP
Chartered Accountants
Firm's Registration No.:101248W/W-100022
Sudhir Soni
Partner
Place: Mumbai Membership No.: 041870
Date: 08 May 2025 ICAI UDIN:25041870BMOMLH7802
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