Cipla Limited
Report on the Audit of the Standalone Financial Statements
Opinion
1. We have audited the accompanying standalone financial statements of Cipla Limited ('the Company"), which comprise the Standalone Balance Sheet as at 31 March 2026, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Cash Flow and the Standalone Statement of Changes in Equity for the year then ended, and notes to the standalone 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 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 ('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 31 March 2026, 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 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 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 Matters
4. 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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5.
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We have determined the matters described below to be the key audit matters to be communicated in our report.
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Key audit matter
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How our audit addressed the key audit matter
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DPCO matters: (Refer note 9 and 40A to the Standalone Financial Statements)
The Company had received several demand notices/ communications from the National Pharmaceutical Pricing Authority ("NPPA") commencing from the year 1998 seeking recovery of alleged overcharging regarding scheduled drugs under the Drugs (Prices Control) Orders ("DPCO"). The Company has reviewed all the notices/ communications received which are attributable to the Company and are under litigation at various forum as follows: a) DPCO demands for certain products wherein after removing duplications, the amount covered by the notices / communications aggregates to H 2,011 Crores with the principal of H 863 Crores and interest of H 1,148 Crores and the Company has deposited H 175.08 crores based on Hon'ble Supreme Court ("SC") judgement in 2003 and H 27.07 crores in the current year under protest without prejudice to the Company's position of no amount being due towards the alleged overcharge (principal) or consequential interest.
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Our audit of DPCO matters included, but was not limited to, the following procedures:
a) Obtained an understanding of the management's process for updating the status of the matters and assessed the appropriateness of the Company's accounting policies related to provisions and contingent liabilities in accordance with Ind AS 37;
b) Evaluated the design and tested the operating effectiveness of key controls around above process;
c) Inspected correspondence with the Company's external legal counsel in order to corroborate our understanding of these matters, accompanied by discussions with both internal and external legal counsels. Tested the objectivity and competence of such management experts involved;
d) Obtained direct confirmation from the external legal counsel handling DPCO matters with respect to the legal determination of the liability arising from such matters including demand notices which are jointly addressed to the promoter group manufacturing companies and the Company, conclusion of the matters in accordance with the requirements of Ind AS 37 and
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Key audit matter
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How our audit addressed the key audit matter
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b) DPCO demands on products other than above, wherein
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disclosures to be made in the financial statements. Evaluated
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based on its legal assessment, the Company carries a
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the response received from the external legal counsel to ensure
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provision of H 94.77 crores as at 31 March 2026.
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that the conclusions reached are supported by sufficient legal
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c) DPCO demands amounting to H 9.96 crores issued jointly
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rationale;
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to 2 promoter group manufacturing companies and the
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e)
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Assessed the appropriateness of methods used, and the reliability
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Company, wherein based on its legal assessment, the
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of underlying data for the calculations made for quantifying
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Company is not the manufacturer and, accordingly, is
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the amounts involved. Tested the arithmetical accuracy of such
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not liable for such demands.
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calculations; and
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The amounts involved are material and the application of
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f)
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Evaluated the appropriateness and adequacy of disclosures
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accounting principles as given under Ind AS 37, Provisions,
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given in the standalone financial statements, including disclosure
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Contingent Liabilities and Contingent Assets ('Ind AS 370, in
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of the significant litigations of the Company, in accordance with
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order to determine the amounts to be recognised as liability
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applicable accounting standards.
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or to be disclosed as a contingent liability or not, is inherently
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Based on the audit procedures performed, the judgements made by
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subjective and needs careful evaluation and significant
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the management were reasonable and disclosures made in respect
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judgement to be applied by the management in predicting
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of these matters were appropriate in the context of the standalone
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the outcome of the matter. Accordingly, DPCO matters have
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financial statements taken as a whole.
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been considered to be a key audit matter for the current period audit.
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Recoverability of investments in subsidiaries: (Refer note
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Our audit included, but was not limited to, the following procedures:
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5 to the Standalone Financial Statements)
The Company has investments of H 10,682.46 crores in subsidiaries being carried at cost/ deemed cost in accordance with Ind AS 27, Separate Financial Statements. At each period end, the management reviews whether any impairment indicators exist in the carrying value of investments, in accordance with the requirements of Ind AS 36, "Impairment of Assets" ('Ind AS 36'). The Company assesses the recoverable amounts of each investment when impairment indicators exist.
Management's assessment of whether there are impairment indications and estimate of the recoverable amounts of the identified investments determined through discounted cash flow valuation method requires significant judgment in carrying out the impairment assessment. The key assumptions
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a)
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Obtained an understanding of the management's process for identification of impairment indicators and evaluated the design and tested the operating effectiveness of key controls over such identification and impairment assessment of identified investments;
Obtained the impairment assessment workings prepared by the management and its experts;
Involved auditor's experts to assess the appropriateness of the valuation methodologies and the reasonableness of the assumptions used by the management's expert to determine the recoverable amounts;
Reconciled the cash flows to the business plans approved by the respective Board of Directors of the identified investee companies;
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used in management's assessment of the recoverable
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e)
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Evaluated and challenged management's assumptions such as
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amounts include, but are not limited to, projections of
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implied growth rates during explicit period, terminal growth rate,
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future cash flows, growth rates, discount rates, estimated
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targeting savings and discount rate for their appropriateness
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future operating and capital expenditure. Changes to these
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based on our understanding of the business of the respective
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assumptions could lead to material changes in estimated
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investee companies, past results and external factors such as
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recoverable amounts, resulting in either impairment or
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industry trends and forecasts;
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reversals of impairment taken in prior years.
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f)
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Obtained and evaluated sensitivity analysis performed by the management on key assumptions of implied growth rates during explicit period, terminal growth rates and discount rates;
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Tested the mathematical accuracy of the management computations;
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Performed independent sensitivity analysis of aforesaid key assumptions to assess the effect of reasonably possible variations on the current estimated recoverable amount for each of the identified investments to evaluate sufficiency of headroom between recoverable value and carrying amount; and
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Key audit matter
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How our audit addressed the key audit matter
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Considering the materiality and the inherent subjectivity
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i) Evaluated the appropriateness and adequacy of disclosures
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which involves significant management judgment in
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given in the standalone financial statements, including
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predicting future cash flow projections, recoverability of
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disclosure of significant assumptions, judgements and sensitivity
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investments in subsidiaries has been considered to be a key
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analysis performed, in accordance with applicable accounting
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audit matter for the current period audit.
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standards.
Based on the audit procedures performed, we determined that the management's assertion on the recoverability of investments in subsidiaries is appropriate in the context of the standalone financial statements taken as a whole.
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Revenue from operations: (refer note 1.3.9 and 27 to the
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Our audit included, but was not limited to, the following procedures:
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Standalone financial statements)
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a) Obtained an understanding of the management's process for
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The Company recognizes revenue from sales of
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revenue recognition, judgments in estimation and accounting
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pharmaceutical products, when control of the product is
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treatment of discount schemes, returns, rebates and other price
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transferred. The Company records product sales net of
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adjustments;
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estimated discounts, right to returns, rebates and other
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b) Evaluated the design and tested the operating effectiveness of
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price adjustments. The actual point in time when revenue
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the key controls, including general IT controls, key IT application
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is recognized varies depending on the specific terms and
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controls exercised by the management, over recognition of
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conditions of the sales contracts entered with customers.
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revenue and measurement of various discount, right to returns,
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Further, the Company has a large number of customers
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rebates and other price adjustments;
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operating in various geographies and sales contracts with
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c) Performed substantive testing by selecting samples of revenue
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customers have different terms relating to the recognition
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transactions pertaining to sale of products during the year
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of revenue leading to material deductions from gross sales
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and verified the underlying supporting documents including
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which includes discounts, right to return, rebates and other
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contracts, agreements, sales invoices and dispatch/ shipping
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price adjustments in accordance with principles of Ind AS 115, "Revenue from Contracts with Customers" ('Ind AS 115').
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documents;
d) Performed substantive testing by selecting samples of revenue
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We identified the recognition of revenue from operations as
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transactions pertaining to sale of products during specific
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a key audit matter because:
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periods before and after year end to ensure that the correct
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a) Accrual towards discounts, right to returns, rebates and
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amount of revenue is recorded in the correct period;
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other price adjustments is complex and requires significant
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e) Obtained management workings for amounts recognised
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judgments and estimates in relation to contractual
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towards discount schemes, right to returns and rebates and
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agreements/ commercial terms across various geographies.
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other price adjustments during the year and as at year end.
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Any change in these estimates can have a significant
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On a sample basis, tested the underlying calculations for
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financial impact.
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amounts recorded as accruals and provisions towards the
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b) The Company considers revenue as key benchmark for
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aforementioned obligations, as per the terms of related
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evaluating performances and hence, there is risk of revenue
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schemes, contracts and regulations and traced the underlying
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being overstated due to pressure to achieve targets, earning
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data to source documents;
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expectations or incentive schemes linked to performance for
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f) Evaluated historical accuracy of the Company's estimates of
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a reporting period.
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year-end accruals pertaining to aforesaid arrangements made in the previous years to identify any management bias;
g) Tested the manual sales-related adjustments made to revenue comprising of variable consideration under Ind AS 115 to ensure the appropriateness of revenue recognition during the year; and
h) Evaluated the appropriateness and adequacy of disclosures given in the standalone financial statements in accordance with applicable accounting standards.
Based on audit procedures performed, we determined that the revenue recognition and measurement is appropriate in the context of the standalone financial statements taken as a whole.
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Information other than the Standalone 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 standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do 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 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, 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.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
7 The accompanying standalone 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 standalone 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 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 standalone 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 Standalone Financial Statements
10. 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 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 standalone 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 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) (i) 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 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 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; and
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.
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 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
15. As required by section 197(16) of the Act, based on our audit, we report that the Company 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.
16. 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 I a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
17. Further to our comments in Annexure I, 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 standalone financial statements;
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;
c) The standalone financial statements dealt with by this report are in agreement with the books of account;
d) In our opinion, the aforesaid standalone 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 31 March 2026 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 financial statements of the Company as on 31 March 2026 and the operating effectiveness of such controls, refer to our separate report in Annexure II wherein we have expressed an unmodified opinion; and
g) 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 as at 31 March 2026;
ii. The Company as detailed in note 53 to the standalone financials statements, has made provisions as at 31 March 2026, as required under applicable laws or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts;
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 31 March 2026;
iv. a. The management has represented that, to the
best of its knowledge and belief, other than as disclosed in note 46(j) and note 46(k) to the standalone 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 46(f) to the standalone 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. a. The final dividend paid by the Company during the year ended 31 March 2026 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.
b. As stated in note 49B(b) to the accompanying standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year ended 31 March 2026 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. Based on our examination which included test checks, the Company, in respect of financial year commencing on 1 April 2025, has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility at the application level and at the database level with an access management tool and the same has 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. Furthermore, the audit trail has been preserved by the Company as per the statutory requirements for record retention at application level since commencement of audit trail requirement from 1 April 2023 and at the database level from 7 June 2024 onwards.
For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Adi P. Sethna
Partner
Membership No.: 108840 UDIN: 26108840FCNWJY3844
Place: Mumbai Date: 13 May 2026
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