Financial Accounting for Management

Sreedhar Babu Karimi EPGP-14C-234

December 26, 2021

SMS PHARMACEUTICALS LTD.

(SMSPHARMA | 532815 | INE812G01025)

Q1:
A) Property Rights: Property rights define the theoretical and legal ownership of resources usually consisting of land,
property, plant, and equipment, etc. The report does contain the details of Property, Plant, and Equipment., as
mentioned in Point (41.2) on Page 151 under Net Carrying Value.

B) Business Entity: The report does not contain personal accounts of the shareholders nor there are any provisions
for personal spending in the balance sheet, thus upholding the business entity concept. Pays dividends, liable as a
business entity to shareholders., as mentioned in Point (18.4) on Page 191. Thus, this signifies ownership-
management separation.

C) Going Concern: It is explicitly mentioned in ‘Director’s Responsibility Statement’ that the Annual Accounts had
been prepared on a going concern basis., as mentioned in Point (4) on Page 33. During the year under review, there
were no significant material orders passed by the Regulators / Courts which would impact the going concern status
of the Company and its future operations.

Standalone financial statements have been prepared by the Company as a going concern based on relevant
Ind AS that are effective at the Company’s annual reporting date, 31st March 2021. These Standalone Financial
statements for the year ended 31st March 2021 were authorized and approved for issue by the Board of Directors on
28th May 2021., as mentioned in Point (2.1) on Page 113.

D) Monetary Expression in Accounts: The common denominator used by the company is Indian Rupees. All business
transactions have been recorded in terms of Indian Rupees in Lakhs.

E) Accrual Principle: Accrual principle consists of two concepts: matching and realization. ‘Significant Accounting
Policies’ is mentioned in Note b under Accounting Convention and states that the financial statement has been
prepared on an accrual basis., as mentioned in Point (2.2) on Page 113 and 173.

F) Consistency Between Accounting Periods: The financial statement has been prepared as a going concern in
accordance with Indian Accounting Standards (Ind AS) notified under the Section 133 of the Companies Act, 2013
("the Act) read with the Companies (Indian Accounting Standards) Rules, 2015 and other relevant provision of the
Act. (page 101)

G) Conservatism: The financial statements include depreciation of assets and other provisional accounts created
based on the prudence concept, with the method of depreciation as mentioned in section 4 Property, Plant, and
Equipment from the Notes of Financial Statements on Page 185.

H) Dependability of Data Through Internal Control: The Company has well established and maintained internal
controls for financial reporting and that we have evaluated the effectiveness of internal control systems of the
Company pertaining to financial reporting and we have disclosed to the auditors and the audit committee,
deficiencies in the design or operation of such internal controls, if any, of which we are aware and the steps they
have taken or propose to take to rectify these deficiencies., as mentioned On Page 53.

I) Timeliness in Financial Reporting: The financial statements have been prepared as a going concern in accordance
with the Indian Accounting Standards as notified under section 133 of the Companies Act 2013 (“the Act”) read with
the Companies (Indian Accounting Standards) Rules 2015 issued by Ministry of Corporate Affairs (‘MCA’). The
Company has uniformly applied the accounting policies during the years presented., as mentioned in Point (2.1) on
Page 113 and 173.
J) Consistency of Accounting Policies: Company has laid down the set of standards which enables to implement of
internal financial control across the organization and ensure that the same are adequate and operating effectively (1)
to provide reasonable assurance that transactions are executed in conformity with generally accepted accounting
principles/standards or any other criteria applicable to such statements, (2) to maintain accountability for assets;
access to assets is permitted only in accordance with management’s general or specific authorization and the
maintenance of the records are in reasonable detail, accurate and fairly reflect the transactions and dispositions of
the assets of the company, (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the assets that could have a material effect on the Financial
statements., as mentioned on Page 31.
The Directors have selected such accounting policies and applied them consistently and made
judgments and estimates that are reasonable and prudent to give a true Financial Account for management and a
fair view of the state of affairs of the Company as at end of Financial Year ended March 31, 2021, and of the Profit
and Loss of the Company for that period.

Q2:

STAKEHOLDERS INFORMATION USEFUL PURPOSE

State Government Local GST Local GST impact on Operational
Sec 27 Pg. no. 200,141 Revenue.
Central Corporate Income Tax Calculating the taxes and overall
Government, Sec 36 Pg. no. 200,204 revenue of the industry. Evaluation of
Ministry of Finance taxable profits, the amount of tax paid
for the year
SEBI, RBI, and such Securities listing norms To keep a tab on security listing norms
regulatory bodies Risk Management Policy, Pg. no. 27 that are being followed by the
Share Transfer System, Pg. no. 68 organization and to Check compliance
AGM Notice, Pg. no. 227 with provisions provided.
Employees Union Financial and operating performance Are wage increments proportionate to
Profit After Tax, under Financial summary, Pg. organization financial performance?
no. 25
Employee Benefits Expense, Sec 32, Pg. no. 142
Public/ Corporate Social Responsibility Pg. no. 20 Companies Social and cultural
Community/Society upliftment activities
Long term Lenders Credit Rating, Pg. no. 32 Is the firm open to long-term lending?
Debt Equity Ratio, Pg. no. 42
Cash Flows from Financing Activities, Pg. no.
111
Banker-cum- Long-Term Working Capital Term Loans, Sec Firms’ eligibility to take next working
working capital 20.1.1 (b), Pg. no. 135 capital finance from banks
providers Credit Rating, Pg. no. 32
Profit After Tax, under Financial summary, Pg.
no. 25
Debt Equity Ratio, Pg. no. 42
Cash Flows from Financing Activities, Pg. no.
111
Investors Profitability, Profit After Tax, under Financial To evaluate the performance of their
summary, Pg. no. 25 investment and to check whether they
Dividend, Financial Summary, Pg. no. 26 can reap any benefits by investing into
Earnings per share, Financial Summary, Pg. no. the company
25
Equity Build-up Report, Pg. no. 45
Shareholders – Revenue, Financial and operating performance,
Public and Private Chairman’s letter, Pg. no. 12
Dividends, Financial Summary, Pg. no. 26
Assets, Pg. no. 108
Outstanding shares and equity, Share Holding
Pattern, Pg. no. 47
Share Transfer System, Pg. no. 68
Informing the Shareholders of the
Financial performance, Safety,
Profitability of Investment, and
significant financial indicators for future
decisions.