Super Pharma Inc, a company registered in USA has a place of business in India with manufacturing operations and is dealing in Cardiac Stents in addition to other medical equipment. The overall turnover of the company is

As per Rule 3 of the Companies (Cost Records and Audit) Rules 2014, companies, including foreign companies, engaged in the production of goods or services specified in the table given in the Rule 3 having an overall turnover from all its products and services of ₹35 Crore or more during the immediately preceding financial year are required to maintain cost records for the products and services included in such table. Production, import and supply or trading of Cardiac Stents is included in Point No. 33 of such table under non-regulated sector. However, as per proviso to Rule 3, nothing contained in serial number 33 shall apply to foreign companies having only liaison offices. Further, as per Rule 4, every company covered under Rule 3 in non-regulated sector shall get its cost records audited if the overall turnover of the company from all its products and services during the immediately preceding year is ₹100 Crore or more and the aggregate turnover of the individual product or service for which cost records are maintained is ₹35 Crore or more. Therefore, in the instant case, since Super Pharma Inc has manufacturing operations in India and having overall turnover of ₹200 Crore (which is > ₹100 Crore) and the turnover from Cardiac Stents is ₹40 Crore (which is > ₹35 Crore), cost audit is mandatory for the company for Cardiac Stents. Rule 4(3) provides exemption from cost audit if the revenue from exports in foreign exchange exceeds 75% of its total revenue. Therefore, in case if Super Pharma Inc has an export turnover of ₹32 Crore (out of ₹40 Crore total turnover for Cardiac Stents), the export percentage is (32/40)*100 = 80%. Since 80% > 75%, they will be exempted from the requirement of cost audit in respect of Cardiac Stents.