CIAN HEALTHCARE LIMITED (A COMPANY UNDER CIRP VIDE NCLT ORDER DATED 11 JUNE 2024)CORPORATE INSOLVENCY PROCEEDINGS AS PER INSOLVENCY AND BANKRUPTCY CODE, 2016 (IBC)
REPORT ON AUDIT OF THE STANDALONE FINANCIAL STATEMENTS Material Background for this Audit Report
The Hon'ble National Company Law Tribunal, Mumbai Bench ("NCLT") admitted an Insolvency and Bankruptcy petition filed by an operational creditor against Cian Healthcare Limited ("the Company") and ordered the commencement of Corporate Insolvency Resolution Process (CIRP) of Cian Healthcare Limited, the Company/Corporate Debtor, vide its Order dated 11th June 2024 and Mr. Roshen Chordiya was appointed as the Interim Resolution Professional by, the NCLT. Further, the Petition was withdrawn by NCLT in order dated 20 June 2024. Thereafter, the order commencement of CIRP was restored from 14th August 2024.The Committee of Creditors('COC) at its meeting held on 21st February 2025 approved the appointment of Mr. Roshen Chordiya, Interim Resolution Professional as Resolution Professional as per Section 22 (2) of Insolvency & Bankruptcy Code, 2016, which has been confirmed by NCLT vide its order dated 20 March 2025, with a direction to initiate appropriate action contemplated, with extant provisions of the Insolvency and Bankruptcy Code, 2016 and other related rules. In view of pendency of the Corporate Insolvency Resolution Process (CIRP), the powers of the Board of Directors of the Company have been suspended, and the management of the affairs of the Company and power of the Board of Directors are now vested with the Resolution Professional, and the Statement is being signed by the Resolution Professional in exercise of such powers.
Opinion
We were engaged to audit the accompanying Standalone financial results of Cian Healthcare Limited (hereinafter referred to as the “Company”) which comprise the Standalone Balance sheet as at 31 March 2025, the Standalone Statement of Profit and Loss and Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as “the Standalone financial statements”).
Because of the significance of the matters described in the 'Basis for Disclaimer of Opinion' paragraph of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these Financial Statements of the Company as at March 31, 2025, accordingly we do not express an opinion on the accompanying Financial Statements of the Company.
Basis for Disclaimer Opinion
1. 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 (SAs). Our responsibilities under those Standards 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 (ICAI) together with the independence requirements that are relevant to our audit of the Standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics.
2. For the paragraphs mentioned below (a-s), we are unable to comment on the elements of Financial Statements which may require necessary disclosures/ documentation/ explanation/and or adjustments and impact of the same on Financial Statements. We were unable to obtain sufficient and appropriate audit evidence on the matters mentioned below, which may have a material and pervasive impact on the financial position of the Company for the year ending on March 31, 2025.
a) We refer to N ote mentioning RP's inability to compile true and fair accounts due to reasons mentioned in the note.
b) As required by SA 510, “Initial Audit Engagements - Opening Balances”, the audit or is required to obtain sufficient appropriate audit evidence about whether:
• opening balances contain misstatements that materially affect the current period's financial statement; and
• appropriate accounting policies reflected in the opening balances have bee n consistently applied in the current period's financial statements, or chang es thereto are properly accounted for and adequately presented and disclo sed in accordance with the applicable financial reporting framework.
In this regard, as stated in the abovementioned note,due to lack of sufficient and a ppropriate evidence, we are unable to comment on the closing balances of the pri or period.
c) In the absence of comprehensive review of carrying amount of certain assets longterm loans and advances, balances with government authorities, deposits, trade receivables, Other Non-Current Assets and other current assets and liabilities and non-availability of confirmation of substantial balances, we are unable to comment upon adjustments, if any, that may be required to the carrying amount of such assets and liabilities and consequential impact, if any, on the loss for the year ended 31 March 2025.
d) The standalone financial results include inventory reported at ^2,562.11 lakhs. However, as per the inventory valuation report provided by the Resolution Professional (RP), the assessed value as at 31 March 2025 is ^1,869.14 lakhs. The difference in valuation has a material impact on the cost of goods sold and closing inventory. However ,the management (RP) has decided to not revalue the inventory in Books of Accounts. In the absence of sufficient appropriate audit evidence to support the inventory value recorded by the management, we are unable to determine the consequential impact on the financial results, including profit/loss, assets, and reserve and surplus.
e) In the absence of sufficient and appropriate audit evidence of the carrying value of Property, Plant and Equipment and Capital Work in Progress as at 31st March 2025, we are unable to comment upon whether any adjustments are required to the carrying amounts of these assets. Consequently, we are also unable to comment on the potential impact of the same on the standalone financial results for the year ended 31st March 2025.
f) As mentioned in Note. 37(a) to the financial statements, pursuant to commencement of CIRP of the Company under Insolvency and Bankruptcy Code, 2016, there are various claims submitted by the financial creditors, operational creditors, employees and other creditors to the RP. The overall obligations and liabilities including interest on loans and the principal amount of loans shall be determined during the CIRP. The outcome of the CIRP process is still pending thus no accounting impact in the books of accounts has been made in respect of excess, short, or non-receipts of claims for financial creditors, operational creditors, employees and other creditor. Hence, consequential impact, if any, is currently not ascertainable and we are unable to comment on possible financial impacts of the same.
g) During the current financial year, the company has not provided interest on loans obtained from various banks and Financial Institutions and other parties , which is not in accordance with generally accepted accounting principles. Had the provision for interest would be recognized , finance cost, total expenses and loss for the year have been higher and having a consequential impact on other current financial liability and other equity. Hence, we are unable to comment on basis and accuracy of interest expense as reflected in profit and loss account for year ended 31st March 2025.
h) We have not received loan statements or external confirmations from the banks, financial institutions, or Non-Banking Financial Companies (NBFCs) for the outstanding loan amounting to ^ 3,311.14 lakhs as at the balance sheet date. Due to the absence of sufficient and appropriate audit evidence regarding the existence and completeness of these loan balances, we are unable to determine whether any adjustments might be necessary to the carrying amounts of borrowings or their
gongrelated disclosures in the financial results for the year ended 31 March 2025.
i) As mentioned in Note 21 to the financial statements, the total balance with the Goods and Services Tax (GST) authorities as per the books of accounts is reported to be ^365.18 lakhs. However, the balance as per Electronic Credit Ledger (PAN based) as reflected on GST portal is Rs. 89.52 lakhs as of 31 March 2025. In the absence of sufficient audit evidence and reconciliations, we are unable to comment on the accuracy and completeness of the balances reported and their consequential impact, if any, on the financial results.
j) During the course of our audit, we observed that the Company has delayed in remitting statutory dues including Provident Fund (PF), Professional Tax (PT), Employees' State Insurance Corporation (ESIC), Tax Deducted at Source (TDS) and other applicable statutory dues to the appropriate authorities within the prescribed time limits. Furthermore, we were unable to verify the balances related to these statutory liabilities as reflected in the books of accounts due to nonavailability of sufficient and appropriate audit evidence and supporting documentation. In our opinion and to the best of our information and according to the explanations given to us, the extent of default and the impact on the financial statements could not be determined.
k) The Company has recognized income from foreign incentives such as Duty Drawback, RODTEP (Remission of Duties and Taxes on Exported Products) benefits, and foreign exchange gain/loss during the year ended 31 March 2025. However, the Company has not provided sufficient and appropriate audit evidence in support of the aforesaid income, including relevant documentation, reconciliations. In the absence of such audit evidence, we are unable to determine the accuracy, completeness, and appropriateness of the income recognized in the financial results. Accordingly, we are unable to determine whether any adjustments might be necessary in respect of such income and the consequential impact, if any, on the profit/loss for the year, reserves, and disclosures in the financial results as at and for the year ended 31 March 2025.
l) With respect to related party disclosures and transactions made under Note No. 35 of the financial statements, we are unable to confirm or comment whether the details provided are complete and in compliance with the requirements of section 188 of the Companies Act, 2013 and AS-18 Related Party Disclosures.
m) The System of Internal Financial control over financial reporting with regard to company were not made available to us to determine if company has established adequate internal financial control over financial reporting and whether such internal financial control was operating effectively.
n) We have not been provided with any documented framework to ascertain completeness and timely compliance with provisions of various applicable statues. Major non-compliances observed are - as required by section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014 the Company has not conducted audit of Cost records.
o) The company has represented that it maintains an audit trail as required under the applicable provisions of the Companies Act, 2013. However, we were unable to independently verify the integrity, completeness, and effectiveness of the audit trail for the year under audit. Accordingly, we are unable to comment on the adequacy and operating effectiveness of the audit trail maintained by the company.
p) Section 129(3) of Companies Act 2013, mandates that companies with subsidiaries or associate companies must prepare consolidated financial statements, in addition to their standalone financial statements. h) We draw attention to Note 15 of the accompanying standalone financial results, which describes the circumstances relating to the investment of ^708.84 lakhs made by the Company in its subsidiary, Dr. Smiths Biotech Private Limited. However , as the Hon'ble National Company Law Tribunal, Mumbai Bench ("NCLT") admitted an Insolvency and Bankruptcy petition filed by an financial creditor against Dr. Smiths Biotech Private Limited ("the subsidiary") and ordered the commencement of Corporate Insolvency Resolution Process (CIRP) of Dr. Smiths Biotech Private Limited, the Company/Corporate Debtor, vide its Order dated 28th April 2025 and Ms. Megha Agrawal (IBBI/IPA-001/IP-P-01456/2018- 2019/12272 )is appointed as the Interim Resolution Professional by, the NCLT. As the CIRP is currently under process, we are unable to comment on any adjustments, if required, to the carrying value of the said investment and the consequential impact, if any, on the financial results of the Company for the year ended 31st March 2025.
q) As referred in Note 36.05,the Company has not provided for long-term employee benefits such as gratuity and leave encashment , since the actuarial valuation report was not available as on the date of audit. In the absence of the actuarial valuation report and related documentation, we were unable to obtain sufficient and appropriate audit evidence regarding the amount of provision required for these employee benefits.
r) The Company mentioned in Note 37(b) of the Financial Statements that, considering the Company is required to be run as a going concern under CIRP, the Financial Statements have been prepared on a going concern basis. However, we found Material uncertainty relating to Going Concern assumption applied to the Financial Statements. The Company has been referred to the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, and there is considerable decline in level of operations of the Company, and net worth of the Company reported at Rs. 4214.53 lakhs as on reporting date which has
substantially declined as compared to Rs. 6181.16 lakhs as of 31st March 2024.Thus, there exists a material uncertainty about the ability of the Company to continue as a "Going Concern”. The same depends upon the outcome of appeals and/or any other developments in the resolution process. The appropriateness of preparation of Financial Statements on going-concern basis is critically dependent upon CIRP as specified in the Code. Necessary adjustments required on the carrying amount of assets and liabilities are not ascertainable. Further we are unable to comment on the remarks/explanation provided by the Company under Note 38 to the Financial Statements in relation to Analytical Ratios.
s) We have been informed by the RP that certain information including the minutes of the meetings of the COC, and the outcome of certain specific/ routine procedures carried out as part of the IBC process are confidential in nature and could not be shared with other than the COC and Hon'ble NCLT. In the opinion of the RP, the matter is highly sensitive, confidential and may have adverse impact on the resolution process. Accordingly, we are unable to comment on the impact, if any, on the accompanying standalone financial results including recognition, measurement and disclosures that may arise had we been provided access to the above-mentioned information.
t) For the matters mentioned in para (a) to (s) above, we are unable to determine the adjustments that are necessary in respect of Company's assets, liabilities as on Balance sheet date, income and expenses for the year, cash flow statement and related presentation and disclosures in Financial Statements so we disclaim to form any opinion on the financial statement. Further, we would like to inform that we were appointed as Statutory Auditor of the Company only on January 10, 2025 for conducting Statutory Audit for FY 2024-25. For the matters stated in “Basis of Disclaimer of Opinion paragraph above”, we are not cognizant of matters that pertains to earlier financial years.
Management's Responsibility for the Financial Statements
The Company's management is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these Financial Statements that give a true and fair view of the state of affairs, profit, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards (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 the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records,
relevant to the preparation and presentation of the Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's ability to continue as 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.
The Board of Directors is responsible for establishing and maintaining adequate and effective controls in respect of use of accounting software that entails the requisite features as specified by the Companies (Accounts) Rules, 2014, as amended from time to time, including an evaluation and assessment of the adequacy and effectiveness of the company's accounting software in terms of recording and maintaining audit trail (edit log) of each and every transaction and ensuring that the audit trail cannot be disabled and has been operated throughout the year for all transactions recorded in the software and the audit trail feature has not been tampered with and the audit trail has been preserved by the company as per the statutory requirements for record retention.
The Management is also responsible for overseeing company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our responsibility is to conduct an audit of the entity's Financial Statements in accordance with Standards on Auditing and to issue an auditor's report. However, because of the matters described in the Basis for Disclaimer of Opinion paragraph of our report, we were not able to obtain sufficient appropriate audit evidence to provide an opinion on these Financial Statements.
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 ("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 Financial Statements.
We are independent of the entity in accordance with the ethical requirements in accordance with the requirements of the Code of Ethics issued by ICAI and the ethical requirements as prescribed under the laws and regulations applicable to the entity.
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 sub-section (11) of section 143 of the Companies Act, 2013, we give in the “Annexure-I”, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
As required by Section 143(3) of the Act, we report that:
i. As described in the Basis for Disclaimer of Opinion paragraph above, we have sought but were unable to obtain all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.
ii. Due to the possible effects of the matters described in the Basis for "Disclaimer Opinion" paragraph above and on account of relevant data not currently available with the Company, we are unable to state whether proper books of accounts as required by law have been kept by the company, so far as it appears from the examination of those books.
iii. The Balance sheet, the Statement of Profit & Loss , and the Cash Flow Statement dealt with by this Report are in agreement with the books of account. Also, as mentioned in 2(b) above, we are unable to comment whether the books of accounts are proper.
iv. Because of the possible effects of the matters mentioned in the “Basis of Disclaimer of Opinion” para above, and owing the general lack of information, we cannot form an opinion whether the aforesaid financial statements comply with the AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
v. The matters described under the Basis of Disclaimer of Opinion and material uncertainty related to going concern paragraph above in our opinion, may have an adverse effect on the functioning of the Company and on the amounts disclosed in the Financial Statements of the Company.
vi. Since we were not able to obtain written confirmation from the erstwhile Directors, we are unable to comment whether all the directors are disqualified as on 31st March 2025 from being appointed in terms of Section 164(2) of the Act.
vii. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure-II”. We have disclaimed our opinion on the Company's internal financial controls over financial reporting.
2. 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. Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the Company has disclosed the complete impact of pending litigations on its financial position in the Financial Statements.
ii. As per the information and explanation given to us, the Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses.
iii. As per the information and explanation given to us, the Company was not required to transfer any amount to the Investor Education and Protection Fund during the year.
iv. With respect to the other matters to be included in the Auditor's Report in accordance with the requirements of Section 197(16) of the Act, as amended, in our opinion and according to the information and explanations given to us, no remuneration has been paid to any director 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.
For S S R C A & Co
Chartered Accountants
ICAI Firm Registration No: 108726W
SD/-
CA Hemant Samdani
Partner
Membership Number: 155955
UDIN: 25155955BMKYQJ8784
Place: Pune
Date: 11 June 2025
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