Aster DM Healthcare Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of Aster DM Healthcare Limited (“the Company"), which comprise the Balance Sheet as at 31 March 2023, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information which includes financial statements of DM Healthcare Employees Welfare Trust (the “ESOP trust") for the year ended on that date audited by the ESOP trust auditor.
In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of report of the ESOP trust auditor on separate financial statements referred to in the Other Matters section below, 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 Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2023, and its profit, total comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
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. Our responsibilities under those Standards are further described in the Auditor's Responsibility 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 ethical 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. We believe that the audit evidence obtained by us and the audit evidence obtained by the ESOP trust auditor in terms of their report referred to in the Other Matters section below, is sufficient and appropriate to provide a basis for our audit 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. We have determined the matters described below to be the key audit matters to be communicated in our report.
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Sr.
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Key Audit Matter
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Auditor's Response
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1
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Evaluation of Impairment Assessment of Investment in Subsidiaries
As at 31 March 2023, the Company has Rs. 2,141.10 crores of investments in subsidiaries. The management tests such investments for impairment annually or more frequently, if there is a trigger for assessing impairment.
The Company's evaluation of impairment of its investments in subsidiaries involves a comparison of its expected recoverable values against its carrying values. The recoverable amount of the investment is based on Value in Use (VIU) calculations determined based on a discounted cash flow model. Determination of VIU involves significant estimates, assumptions and judgements as regards reasonableness of assumptions involved in developing projections of financial performance and discount rates to be considered.
Given the above complexities, the determination of recoverable amount is subjective as it involves specific assumptions applicable to each investment which includes revenue growth rates, Earning Before Interest, Tax, Depreciation and Amortisation (EBITDA) margins, terminal growth rates and discount rates applied to estimated future cash flows.
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Principal audit procedures performed:
We tested the design, implementation and operating effectiveness of internal controls over the Company's impairment evaluation by testing on a sample basis:
• The forecasting process including controls related to the development of the revenue growth rates and EBITDA margins
• The impairment review specifically the assumptions used to develop the terminal growth rate, the discount rates and the mathematical accuracy of the workings and basis for final conclusion.
We received the managements evaluation of the impairment assessment for sample investments and evaluated reasonableness of management's assumptions related to revenue growth rates, EBITDA margins and discount rates by considering
(i) the current and past performance of each of the investments,
(ii) the consistency of internal assumptions with external market information and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit and also (iv) subjected the various assumptions to certain sensitivity to key inputs and (v) testing the integrity and mathematical accuracy of the impairment models.
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Information Other than the Financial Statements and Auditor's Report Thereon
• The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Company's Annual report, but does not include the consolidated financial statements, standalone financial statements and our auditor's report theron. The report is expected to be made available to us after the date of this auditor's report.
• Our opinion on the standalone financial statements does not cover the other information and we do not express 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 when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. Other information in so far as it relates to the ESOP trust is traced from their fianancial statements audited by the ESOP trust auditor.
• When we read the Annual Report, if we conclude that there is material misstatement therein, we are required to communicate
the matter to those charged with governance as required under SA 720 'The Auditor's responsibilities relating to other information.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Company's Board of Directors is 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 financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Ind AS 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 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 statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
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Sr.
No.
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Key Audit Matter
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Auditor's Response
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Refer note for policy on “Impairment of financial assets"-
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We involved our internal fair value specialists to assist in the
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Investments, note on “Critical accounting estimates and
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evaluation of the appropriateness of the Company's model
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assumptions" related to impairment reviews and note
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for calculating value in use for each of the investments and
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“Investments" for disclosures related to impairment review of
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reasonableness of certain significant assumptions, such as
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investments in the standalone financial statements.
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terminal growth rate and discount rate.
We reviewed the investments disclosed in the financial statements in accordance with the Companies Act, 2013.
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2
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Implementation of new IT system used for accounting/financial
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Principal audit procedures performed:
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reporting
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We have performed the following principal audit procedures
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The Company implemented a new IT system which is an enterprise
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involving our IT Specialists in relation to the new IT system
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resource planning application used for accounting/financial
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implementation:
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reporting during the year (“Go-Live date"). Matters which required significant audit attention in relation to the above implementation included:
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• We understood the Management's implementation plan of the new IT system and the changes from legacy versus the new IT
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system in so far as accounting/ financial reporting is concerned.
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1. Complete and accurate migration of relevant financial and accounting data/ information/balances from legacy IT system to the new IT system.
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• We reviewed the post-implementation report obtained by the Management from an independent third-party IT specialist.
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2. Assessment and evaluation of relevant application systems, programs, processes, interfaces, reports, controls and segregation of duties (SOD) conflicts insofar as they relate to
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• Tested the completeness and accuracy of migration of relevant financial and accounting data/information/balances from legacy IT system to the new IT system.
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accounting and financial reporting.
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• We tested the IT general controls of the new IT system relevant
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3. IT general controls and IT Application controls relevant for
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to financial reporting, including relevant interfaces.
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financial reporting.
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• We tested the design and implementation, and operating
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effectiveness of the relevant business cycle automated controls of the new IT system.
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• We tested the completeness and accuracy of information used
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for controls and also the information produced by the new IT system.
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• We tested the SOD conflicts implemented by the management.
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In preparing the standalone financial statements, management 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.
The Company's Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibility 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 financial 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 standalone 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.
• 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.
• Obtain sufficient appropriate audit evidence regarding the financial information of the Company and the ESOP trust to express an opinion on the standalone financial statements. We are responsible for the direction, supervision and performance of the audit of the financial statements of such entities or business activities included in the standalone financial statements of which we are the independent auditors. For the other equity included in the standalone financial statements, which has been audited by the other auditor, such other auditor remains responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion.
Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial statements.
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 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.
Other Matters
We did not audit the financial statements of the ESOP trust included
in the standalone financial statements of the Company whose financial statements reflect total assets of INR 11.13 crores (before elimination) as at 31 March 2023 and total revenue of INR 0.01 crores for the year ended on that date, as considered in the standalone
financial statements. The financial statements of the ESOP trust has been audited by the ESOP trust auditor whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this ESOP trust and our report in terms of subsection (3) of Section 143 of the Act, in so far as it relates to the aforesaid ESOP trust, is based solely on the report of such ESOP trust auditor.
Our opinion on the standalone financial statements and our report on Other Legal and Regulatory Requirements below is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act, based on our audit and on the consideration of the report of the other auditor on the separate financial statements of the ESOP trust referred
to in the Other Matters section above 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 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 and the report of the ESOP trust auditor.
c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Statement of
Cash Flows and Statement of Changes in Equity dealt with by this Report are in agreement with the relevent books of account and with the financial statements received from the ESOP trust auditor.
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 2023, taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2023, 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 standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure A". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company's internal financial controls with reference to standalone financial statements.
g) 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 to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.
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 has disclosed the impact of pending litigations on its financial position in its 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 were no amounts which were required to be transferred to the Investor Education and Protection Fund by the company;
iv. (a) The Management has represented that, to the
best of it's knowledge and belief, as disclosed in the standalone financial statements, no funds (which are material either individually or in aggregate) 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.
(b) The Management has represented, that, to the best of it's knowledge and belief, as disclosed in the standalone financial statements, no funds(which are material either individually or in aggregate) 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 Party (“Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(c) Based on the audit procedures performed 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 subclause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.
v. The company has not declared or paid any dividend during the year and has not proposed final dividend for the year.
vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company w.e.f. 01 April 2023 and accordingly, reporting under Rule 11(g) of Companies (Audit
and Auditors) Rules, 2014 is not applicable for the financial year ended 31 March 2023.
2. As required by the Companies (Auditor's Report) Order, 2020 (“the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in “Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.
For Deloitte Haskins & Sells
Chartered Accountants (Firm's Registration No. 008072S)
Vikas Bagaria
Partner
Place: Bengaluru (Membership No. 60408)
Date: 25 May 2023 (UDIN 23060408BGYGPB1293)
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