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Notes to Accounts of Aarti Drugs Ltd.

Mar 31, 2016

1. Contingent Liabilities:

a. In respect of bank guarantees issued and L/C opened by the Company''s bankers Rs. 3,785.03/-Lakhs (As at 31st March, 2015 Rs. 4584.73 Lakhs)

b. Demand in respect of additional income tax disputed in appeal Rs. 351.44/-Lakhs (As at 31st March, 2015 Rs. 1,133.91/ Lakhs), sales tax demand Rs. 15.18/- Lakhs (As at 31st March, 2015 Rs. Nil) and demand in respect of additional Excise custom duty, fine & penalty in appeal Rs. 38.88/-Lakhs (As at 31st March, 2015 Rs. 78.51/- Lakhs)

c. Liability for duty on raw material imported under advance license benefit scheme against which export obligation remained to be fulfilled Rs. 259.45/-Lakhs (As at 31st March, 2015 Rs. 189.86/- Lakhs)

d. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances Rs. 303.49/- Lakhs. (As at 31st March, 2015 Rs. 1,212.67/- Lakhs)

e. The company has given corporate guarantee for borrowing facilities of Rs. 1,854/- Lakhs from The Saraswat Co-Op. Bank Limited for its only subsidiary Pinnacle Life Science Private Ltd.

Note:

1) Above term loan are secured by pari-passu first charge by way of mortgage of immovable properties and hypothecation of moveable fixed assets, both present and future situated at MIDC Boisar, viz Plot No. N-198, G-60, E21& E22, E-1, K-40, K-41, E120, E9/3 & E9/4, W-60(B), W61(B), W62(A), W71(B), W72(B), W73(B) and MIDC Turbhe Plot No. D-277 & D-278 in Maharashtra and at GIDC, Sarigam, Bhilad- Gujarat Viz. Plot No. 2902, 2904 & Plot No. 211, 213 & Plot No. 2601, 2602, 2603. The working directors of the company have personally guaranteed corporate loan of Rs. 1,516.40 Lakhs from State Bank of India.

2) Loan from Kotak Mahindra Bank, Standard Chartered Bank, The Shamrao Vithal Co-op Bank Ltd. is also secured by second charge on current assets of the company both present and future.

b. Loans from Scheduled Banks Payable on Demand of Rs. 15,004.37 lakhs (Previous Year Rs. 15,919.07) are secured by hypothecation of Company''s raw materials stock, stock-in-process, finished goods, packing materials, stores & spares, book debts, and all other current assets including goods in transit governed by documents of title and also pari-passu second charge by way of mortgage of immovable properties and hypothecation of movable fixed assets. Both present and future situated at MIDC Boisar, viz. Plot No. N-198, G-60, E21& E22, E-1, K-40, K-41, E120, E9/3, & E9/4, W-60(B), W61(B), W62(A), W71(B), W72(B), W73(B) and at Turbhe Plot No. D-277 & D-278 in Maharashtra and in GIDC , Bhilad, Sarigam- Gujarat viz. Plot No. 2902, 2904, & 211, 213 & 2601, 2602, 2603.

2. The Company has foreign exchange exposure because of its trade related (export/import) fund related function. The company uses forward contracts, Options and Swaps to hedge against its foreign exchange exposures relating to underlying transactions. The Company does not enter into any derivatives instruments for trading or speculation purposes. During the year ended 31.03.2016, the company had hedge in aggregate an amount of Rs. 28,728.66/- Lakhs (previous year Rs. 12,374.71/- Lakhs) out of its annual trade related operations (export & import) aggregating to Rs. 80,179.21/- Lakhs (previous year Rs. 79,433.77/- Lakhs) after considering natural hedge. The company had hedge its outstanding foreign currency long term borrowing Rs. Nil (Previous year Rs. 732.20/- Lakhs).

3. There are no Micro and Small Enterprises, to whom the company owes dues, which are outstanding for more than 45 days as at 31st March, 2016. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

4. In the opinion of the Board, the Current Assets and Loans and Advances have a value on realization at least equal to the amounts at which they are stated in the Balance Sheet.

5. Segment-wise Disclosure as per Accounting Standard: 17.

I. BUSINESS SEGMENTS AS PRIMARY SEGMENTS

The Company is considered to be a single segment Company engaged in pharmaceuticals business, hence the disclosure requirement as per AS-17 ''Business Segments as Primary Segment'' is not attracted.

Note:

Segmental capital employed:

Fixed assets used in the Company''s business or liabilities contracted have not been identified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments. The Company believes that currently it is not practicable to provide segment disclosures relating to total assets and liabilities.

6. Related party transactions:

Related party transactions disclosure as required by Accounting Standard - 18. ''Related Party Disclosures'' issued by The Institute of Chartered Accountants of India are given below:

A. Name and Relationship of the Related Parties:

3(a) Subsidiary - Wholly owned

Pinnacle Life Science Private Ltd.

3(c) Individuals owning directly or indirectly, an interest in the voting power of the reporting enterprise that gives them control or significant influence over the enterprise, and relatives of such individual.

7.As per Sec 135 of the Companies Act 2013, details of amount to be spent on Corporate Social Responsibility are as below. Gross amount to be spent on the CSR activity during the year is Rs. 167.14 Lakhs. During the year Company has spent Rs. 175.38 Lakhs.

8. Figures of the previous year have been regrouped and rearranged wherever necessary.


Mar 31, 2014

1. Contingent Liabilities:

a. In respect of bank guarantees issued and L/C opened by the Company''s bankers Rs. 4,268.40 lakhs (as at 31st March, 2013 Rs. 2,689.84 lakhs)

b. Demand in respect of additional income tax disputed in appeal Rs. 784.66 lakhs (as at 31st March, 2013 Rs. 485.26 lakhs).

c. Demand/Rebate in respect of Excise duty in case of Ammonium Sulphate of Rs. 102.90 Lakhs (as at 31st March, 2013 Rs. 102.90 lakhs). The hon''ble high Court of Mumbai has decided the appeal in favour of the Company in February 2010 on the basis of its earlier judgment in a similar case. however, as per information available with the Company, the Department of Central Excise has filed an appeal in that precedent case in the Supreme Court, hence the Company has continued to disclose this matter. And Demand in respect of Excise duty of Niacin of Rs. 78.51 Lakhs (as at 31st March, 2013 Rs. 78.51 Lakhs) case is pending with CESTAT.

d. Liability for duty on raw material imported under advance licence benefit scheme against which export obligation remained to be fulfilled Rs. 155.53 lakhs (as at 31st March, 2013 Rs. 163.98 lakhs).

e. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 212.13 lakhs (as at 31st March, 2013 Rs. 731.39 lakhs).

Note:

1) Above term loan are secured by pari-pasu first charge by way of mortgage of immovable properties and hypothication of moveable fixed assets, both present and future situated at MIDC Boisar, viz Plot No. N-198, G-60, E21& E22, K-40, K-41 E120, E9/3, & E9/4, and MIDC Turbhe Plot No. D-277 & D-278 in Maharashtra and at GIDC, Sarigam, Bhilad – Gujarat viz. Plot No. 2902, 2904 & Plot No. 211, 213. The working directors of the Company have personally guaranteed Corporate Loan of Rs. 3,329.00 Lakhs from State Bank of India.

2) Kotak Mahindra Bank loan is also secured by second charge on current assets of the Company both present and future.

b. Loans from Scheduled Banks Rs. 17,186.80 lakhs are secured by hypothecation of Company''s raw materials stock, stock- in-process, finished goods, packing materials, stores & spares, book debts, and all other current assets including goods in transit governed by documents of title and also pari-passu second charge by way of mortgage of immovable properties and hypothecation of movable fixed assets, both present and future situated at MIDC Boisar, Maharashtra viz. Plot No. N-198, G-60, E-21 & 22, K-40 & K-41, E-120 and E-9/3 & E-9/4, and at Turbhe Plot No. D-277 & D-278. GIDC, Bhilad, Sarigam – Gujarat viz. Plot No. 2902, 2904, & 211, 213.

c. Short term borrowing include Loans & advances from directors, relatives & corporates amounting of Rs. 1,800.83 Lakhs which is accepted as deposits in F.Y 2012-2013 for term of 3 years and will matured in F.Y. 2015-2016. As per Section 74 of Companies Act, 2013, deposits as on 31st March, 2014 will have to be repaid as and when such payments are due or within one year from such commencement of this section (i.e. 1st April, 2014) whichever is earlier. hence the same is classified as short term borrowings.

2. The Company has foreign exchange exposure because of its trade related (export/import) fund related function. The Company uses forward contracts, Options and Swaps to hedge against its foreign exchange exposures relating to underlying transactions. The Company does not enter into any derivatives instruments for trading or speculation purposes. During the year ended 31.03.2014, the Company had hedge in aggregate an amount of Rs. 10,021.24 Lakhs (previous year Rs. 6,570.92 Lakhs) out of its annual trade related operations (export & import) aggregating to Rs. 69,234.75 Lakhs (previous year Rs. 56,639.48 Lakhs) after considering natural hedge. The Company had hedge its outstanding foreign currency long term borrowing Rs. 2,424.10 Lakhs (previous year Rs. 4,114.60 Lakhs).

3. There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2014. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

4. In the opinion of the Board, the Current Assets and Loans and Advances have a value on realisation at least equal to the amounts at which they are stated in the Balance Sheet.

5. Segment-wise Disclosure as per Accounting Standard: 17. I. BUSINESS SEGMENTS AS PRIMARY SEGMENTS

The Company is considered to be a single segment Company engaged in pharmaceuticals business, hence the disclosure requirement as per AS-17 ''Business Segments as Primary Segment'' is not attracted.

6. related party transactions:

Related party transactions disclosure as required by Accounting Standard – 18. ''Related Party Disclosures'' issued by The Institute of Chartered Accountants of India are given below:

A. Name and relationship of the related Parties:

3(b) Associates

huanggang Yinhe Aarti Pharmaceutical Co. Ltd.

3(c) Individuals owning directly or indirectly, an interest in the voting power of the reporting enterprise that gives them control or significant influence over the enterprise, and relatives of such individual.

3(e) Enterprise/firms over which controlling individuals have significant influence.

- Aarti Industries Ltd.

- Anushakti holdings Ltd.

- Rupal Drugs LLP

- Anushakti Chemical & Drugs Ltd.

- Gogri & Sons Investments Pvt. Ltd.

- Alchemie Gases & Chemicals Pvt. Ltd.

- Alchemie Leasing & Financing Pvt. Ltd.

- Alchemie Pharma chem Pvt. Ltd.

Note : Sr. 3(b),3(c),3(d),3(e) refer to the relevant Para''s of AS 18.

7. Employee Benefits:

a) Defined Benefit Plan

The employee''s gratuity fund scheme managed by Life Insurance of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

b) Leave Encashment :

Leave Encashment liability amounting to Rs. 95.35 lakhs (previous year Rs. 97.00 lakhs) has been provided in the Accounts.

8. Additional information pursuant to the provisions of paragraphs 3, 4CD, 4D and part II of Schedule VI of the Companies Act, 1956 (Figures in bracket relate to 31st March, 2013).

a. Licensed capacity, installed capacity and production (as certified by the Management and not verified by the Auditors, it being a technical matter.)

9. Figures of the previous year have been regrouped and rearranged wherever necessary.


Mar 31, 2013

1.1 Fire incident occurred on 22.03.2013 at one of the Production block of the manufacturing unit located at Plot No. N - 198 Tarapur manufacturing MNI, an intermediate which is further processed to manufacture two APIs. Loss / damage caused to stock and fixed assets due to fire incident has been covered under insurance and accounted for appropriately.

1.2 Contingent Liabilities:

a. In respect of bank guarantees issued and L/C opened by the Company''s bankers Rs. 2689.84 lakhs (As at 31-March-2012 Rs.2257.87 lakhs)

b. Demand in respect of additional income tax disputed in appeal Rs. 485.26 lakhs (As at 31-March 2012 Rs. 250.64 lakhs).

c. Demand /Rebate in respect of Excise duty in case of Ammonium Sulphate of Rs.102.90 Lakhs (as at 31st March 2012 Rs.1 02.90 lakhs). The Hon''ble High Court of Mumbai has decided the appeal in favour of the Company in February 2010 on the basis of its earlier judgment in a similar case. However, as per information available with the Company, the Department of Central Excise has filed an appeal in that precedent case in the Supreme Court, hence the company has continued to disclose this matter.

d. Liability for duty on raw material imported under advance licence benefit scheme against which export obligation remained to be fulfilled Rs.163.98 lakhs (As at 31-March-2012 Rs.55.38 lakhs).

e. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 731.39 lakhs (As at 31-March-2012 Rs.412.72 lakhs).

Note:

1) Above term loan are secured by pari-pasu first charge by way of mortgage of immovable properties and hypothication of moveable fixed assets, both present and future situated at MIDC Boisar, viz Plot No. N-198, G-60, E21-22, K-40, K-41 E120, E9/3 & E9/4, and MIDC Turbhe Plot No. D-277 & D-278 in Maharashtra and at GIDC, Sarigam, Bhilad-Gujarat Viz. Plot No. 2902, 2904.

2) Kotak Mahindra bank loan is also secured by second charge on current assets of the company both present and future.

b. Loans from Scheduled Banks Rs. 1,346,968,836 are secured by hypothecation of Company''s raw materials stock, stock-in- process, finished goods, packing materials, stores & spares, book debts, and all other current assets including goods in transit governed by documents of title and also pari-passu second charge by way of mortgage of immovable properties and hypothecation of movable fixed assets, both present and future situated at MIDC Boisar, Maharashtra viz. Plot No. N-198, G-60, E-21 & 22, K-40 & K-41, E-120 and E-9/3 & E-9/4, W-60(B) 61(B) 62(B) 71(B) 72(B). GIDC, Bhilad, Sarigam-Gujrat viz. Plot No. 2902, 2904 and at Turbhe Plot No. D-277 & D-278. The working Directors of the Company have personally guaranteed these loans.

1.3 There are no Micro and Small Enterprises, to whom the company owes dues, which are outstanding for more than 45 days as at 31st March, 201 3. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

1.4 In the opinion of the Board, the Current Assets and Loans and Advances have a value on realisation at least equal to the amounts at which they are stated in the Balance Sheet.

Note:

Segmental capital employed:

Fixed assets used in the Company''s business or liabilities contracted have not been identified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments. The Company believes that currently it is not practicable to provide segment disclosures relating to total assets and liabilities.

1.5 Related party transactions:

Related party transactions disclosure as required by Accounting Standard - 18. ''Related Party Disclosures'' issued by The Institute of Chartered Accountants of India are given below:

A. Name and Relationship of the Related Parties:

3(b) Associates

Huanggang Yinhe Aarti Pharmaceutical Co. Ltd.

3(c) Individuals owning directly or indirectly, an interest in the voting power of the reporting enterprise that gives them control or significant influence over the enterprise, and relatives of such individual.

1. Individuals

3(e) Enterprise/firms over which controlling individuals have significant influence.

- Aarti Industries Ltd.

- Anushakti Holdings Ltd.

- Rupal Drugs LLP

- Anushakti Chemical & Drugs Ltd.

- Gogri & Sons Investments Pvt. Ltd.

- Alchemie Gases & Chemicals Pvt. Ltd.

- Alchemie Leasing & Financing Pvt. Ltd.

Note : Sr. 3(b),3(c),3(d),3(e) refer to the relevant Para''s of AS 18.

1.6 Figures of the previous year have been regrouped and rearranged wherever necessary.


Mar 31, 2012

PART - A

The Board of Directors of the Company had approved Financial Statements for the year ended 31st March, 2012, at its meeting held on 25th May, 2012 without considering the effect of the proposed amalgamation of Suyash Laboratories Ltd (Amalgamating company) with the Aarti Drugs Ltd (Amalgamated company), pending approval of the scheme by the Hon'ble High Court of Mumbai . The said Financial Statements were approved mainly for compliance of the Listing Agreements of the Bombay Stock Exchange and National Stock Exchange.

Pursuant to the approval of the scheme of amalgamation by the Hon'ble High Court of Mumbai on 11th May, 2012, the amalgamation became effective with effect from 1st April, 2011, fresh Financial Statements as at 31st March, 2012 have been drawn up as per the decision taken by the Board of Directors of the Company.

1.1 Principles of Amalgamation & Disclosures:

a. In terms of the Scheme approved by the Hon'ble High Court, the entire business of Suyash Laboratories Ltd., stands transferred to and vested in the Company with effect from April 01, 2011, as a going concern.

b. As Suyash Laboratories Ltd. was a wholly owned subsidiary of the Company, no consideration was payable pursuant to amalgamation of Suyash Laboratories Ltd. with the Company.

c. The amalgamation of the financial statements of the Aarti Drugs Ltd. and Suyash Laboratories Ltd. is done on line by line basis by adding together like items of assets, liabilities, income and expenses. All intra group transactions, unrealized inter company profits and balances have been eliminated in the course of amalgamation.

d. The financial statements of Aarti Drugs Ltd. and Suyash Laboratories Ltd. have been amalgamated using uniform accounting policies for like transactions and other events in similar circumstances.

e. Amalgamation is carried out as per Accounting Standard 14, issued by the Institute of Chartered Accounts of India.

f. The difference, being the excess of the book value of the investment of the Company in the equity shares of Suyash Laboratories Ltd over the net assets of Suyash Laboratories Ltd. transferred to the Company has been adjusted in Reserves & Surplus of the Company.

g. Pending completion of the relevant formalities of transfer of certain assets and liabilities acquired pursuant to the scheme, such assets and liabilities remain in the name of the Amalgamating Company.

h. The merged company will continue to carry on the business of manufacturers, producers, processors, buyers, sellers, importers, exporters and/or otherwise dealers in pharmaceuticals, drugs, medicines, medicinal preparations, tabulating formulations, injections, alkalies, acids, chemicals and allied products including fine chemicals, perfumes, flavors, cosmetics and other pharmaceutical products as Aarti Drugs Limited.

1.2 Previous year's figures are of Aarti Drugs Ltd. stand alone and hence are not comparable with the current year.

1.3 Figures of previous year have been rearranged or regrouped wherever necessary.

1.4 On 27th February, 2012 fire occurred in Suyash Laboratories Ltd., loss on account of fire of Stock and fixed assets is debited to statement of Profit and Loss Rs. 1.16 crores.

1.5 Contingent Liabilities :

a. In respect of bank guarantees issued and L/C opened by the Company's bankers Rs. 2257.87 lakhs (As at 31st March, 2011 Rs. 1512.17 lakhs)

b. Demand in respect of additional income tax disputed in appeal Rs. 250.64 lakhs. (As at 31st March, 2011 Rs. 34.95 lakhs)

c. Demand /Rebate in respect of Excise duty in case of Ammonium Sulphate of Rs. 102.90 Lakhs (as at 31st March, 2011 Rs. 102.90 lakhs). The Hon'ble High Court of Mumbai has decided the appeal in favour of the Company in February 2010 on the basis of its earlier judgement in a similar case. However, as per information available with the Company, the Department of Central Excise has filed an appeal in that precedent case in the Supreme Court, hence the company has continued to disclose this matter.

d. Liability for duty on raw material imported under advance licence benefit scheme against which export obligation remained to be fulfilled Rs. 55.38 lakhs (As at 31st March, 2011 Rs. 34.63 lakhs)

e. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 412.72 lakhs. (As at 31st March, 2011 Rs. 697.02 lakhs)

1.6 Securities for loans taken from Banks:

a. Balances in respect of outstanding term loan from The Industrial Development Bank of India Rs. 1083.33 lakhs (As at 31st March, 2011 Rs. 2055.56 lakhs), of which Rs. 750 repayable up to F.Y. end 2012-13 and balance Rs. 333.33 lakhs up to F.Y. end 2013-14,Out of the above the loan sanctioned by IDBI on 25th March, 2008 for Rs. 3000 lakhs also secured by second charge on the current assets of the company both present and future as a collateral security. The Export Import Bank of India Rs. 2847.62 lakhs (As at 31st March, 2011 Rs. 1663.87 lakhs), of which Rs. 1047.62 lakhs repayable up to F.Y. end 2014-15 and balance Rs. 1800 up to F.Y. end 2016-17 Standard Chartered Bank Rs. 3483.20 lakhs (As at 31st March, 2011 Rs. 4123.00 lakhs), of which Rs. 1820 lakhs repayable upto 2014-15 and balance Rs. 1663.20 is upto F.Y. end 2015-16. DBS Bank Ltd Rs. 1820.00 lakhs (As at 31st March, 2011 Rs. 1820.00 lakhs), will be repayable up to F.Y. end 2015-16, are secured by pari-passu first charge by way of mortgage of immovable properties and hypothecation of moveable fixed assets, both present and future situated at MIDC Boisar, Maharashtra viz. Plot No. N-198, G-60, E-21 & 22, K-40 & K-41, E-120 and E-9/3 & E-9/4, at GIDC, Bhilad, Sarigam, Gujarat viz. Plot No. 2902 & 2904 and at Turbhe Plot No. D-277 & D-278.

b. Loans from Scheduled Banks Rs. 9540.47 lakhs are secured by hypothecation of Company's raw materials stock, stock-in- process, finished goods, packing materials, stores & spares, book debts, and all other current assets including goods in transit governed by documents of title and also pari-passu second charge by way of mortgage of immovable properties and hypothecation of moveable fixed assets. both present and future situated at MIDC Boisar, Maharashtra viz. Plot No. N-198, G-60, E-21 & 22, K-40 & K-41, E-120 and E-9/3 & E-9/4, GIDC , Bhilad, Sarigam- Gujarat viz. Plot No. 2902, 2904 and at Turbhe Plot No. D-277 & D-278. The working Directors of the Company have personally guaranteed these loans

c. Loan from IDBI Bank as Working Capital Lender to amalgamating company Rs. 930.74 lakhs is secured by way of Exclusive First Charge by way of hypothecation of raw material, stock in process, finish goods, packing material, stores & spares, book debts and all also second charge by way of hypothecation of moveable fixed assets, both present and future situated at MIDC Boisar, Maharashtra viz W-60(B) 61(B) 62(B) 71(B) 72(B).

1.7 There are no Micro and Small Enterprises, to whom the company owes dues, which are outstanding for more than 45 days as at 31st March, 2012. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

1.8 In the opinion of the Board, the Current Assets and Loans and Advances have a value on realisation at least equal to the amounts at which they are stated in the Balance Sheet.

1.9 Segment-wise Disclosure as per Accounting Standard: 17.

I. BUSINESS SEGMENTS AS PRIMARY SEGMENTS

The Company is considered to be a single segment Company engaged in pharmaceuticals business, hence the disclosure requirement as per AS-17 'Business Segments as Primary Segment' is not attracted.

Segmental capital employed:

Fixed assets used in the Company's business or liabilities contracted have not been identified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments. The Company believes that currently it is not practicable to provide segment disclosures relating to total assets and liabilities.

1.10 Related party transactions:

Related party disclosure as required by Accounting Standard - 18. 'Related Party Disclosures' issued by The Institute of Chartered Accountants of India are given below :

A Name and Relationship of the Related Parties :

3(b) Associates

Huanggang Yinhe Aarti Pharmaceutical Co. Ltd.

3(e) Enterprise/firms over which controlling individuals have significant influence.

- Aarti Industries Ltd.

- Anushakti Holdings Ltd. (formerly known as Anushakti Chemical & Drugs Ltd.)

- Rupal Drugs LLP (formerly known as Rupal Drugs Ltd.)

- Anushakti Chemical & Drugs Ltd. (formerly known as Aarti Healthcare Ltd.) Note : Sr. 3(b),3(c),3(d),3(e) refer to the relevant paras of AS-18.

1.11 Sales and other sales income include export benefits amounting to Rs. 23,57,98,005/- (As at 31st March, 2011 Rs.18,13,12,308/-)

1.12. Employee Benefits:

Defined Benefit Plan

The employee's gratuity fund scheme managed by Life Insurance of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.


Mar 31, 2010

1. Contingent Liabilities :

a) In respect of bank guarantees issued and L/C opened by the Companys bankers Rs. 1208.45 lakhs (As at 31st March 2009 Rs 772.31 lakhs).

b) Demand in respect of additional income tax disputed in appeal Rs.36.04 lakhs (As at 31st March 2009 Rs. 573.39 lakhs) refund effect in respect of appeals decided in favour of Company aggregating to Rs.98.32 lakhs are pending.

c) The company has given Corporate Guarantee for Term loan & Working Capital of Rs.NIL lakhs (As at 31st March 2009 Rs.1600 Lakhs) in respect of Suyash Laboratories Ltd .

d) Demand /Rebate in respect of Excise duty in case of Ammonium Sulphate of Rs.102.90 Lakhs (as at 31st March 2009 Rs.102.90 lakhs). The Honble High Court of Mumbai has decided the appeal in favour of the Company in February 2010 on the basis of its earlier judgement in a similar case.

However, as per information available with the Company, the Department of Central Excise has filed an appeal in that precedent case in the Supreme Court, hence the company has continued to disclose this matter.

e) Liability for duty on raw material imported under advance licence benefit scheme against which export obligation remained to be fulfilled Rs.45.43 lakhs (As at 31st March 2009 Rs.4.97 lakhs).

f) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs 16.21 lakhs (As at 31st March 2009 Rs.37.12 lakhs).

2. Securities for loans taken from Banks:

a) Balances in respect of outstanding term loan from The Industrial Development Bank of India Rs. 3027.78 lakhs (As at 31st March 2009 Rs.4027.78 lakhs), The Export Import Bank of India Rs.2515.41 lakhs (As at 31st March 2009 Rs 3176.47 lakhs), Standard Chartered Bank Rs.2275 lakhs (As at 31s March 2009 Rs. NIL), are secured by pari-passu first charge by way of mortgage of immovable properties and hypothecation of moveable fixed assets, both present and future at Tarapur & Sarigam units. Out of the above the working Directors of the Company have personally guaranteed loans sanctioned by EXIM Bank on 21st June 2006 for Rs.2000 lakhs and IDBI Bank on 19th May 2004 for Rs. 500 lakhs the balance in respect of these loans are Rs.705.88 lakhs ( As at 31st March 2009 Rs. 1204.25 ) out of the above the loan sanctioned by IDBI Bank on 25lh March 2008 for Rs.3000 lakhs also secured by second charge on the current assets of the Company both present & future alongwith existing term tender as a collateral security.

b) Loans from Scheduled Banks Rs.6047.94 lakhs (As at 31st March 2009 Rs. 8070.95 lakhs) are secured by hypothecation of Companys raw materials stock, stock-in-process, finished goods, packing materials, stores & spares, book debts, foreign documentary bills and all other current assets including goods in transit governed by documents of title and also pari-passu second charge by way of mortgage of immovable properties and hypothecation of moveable fixed assets. The working Directors of the Company have personally guaranteed these loans.

3. There are no Micro and Small Enterprises, to whom the company owes dues, which are outstanding for more than 45 days as at 31st March, 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

4. In the opinion of the Board, the Current Assets and Loans and Advances have a value on realisation at least equal to the amounts at which they are stated in the Balance Sheet.

5. Segment-wise Disclosure as per Accounting Standard: 17.

I. BUSINESS SEGMENTS AS PRIMARY SEGMENTS

The Company is considered to be a single segment Company engaged in pharmaceuticals business, hence the disclosure requirement as per AS-17 Business Segments as Primary Segment is not attracted.

Notes:

a. Segmental capital employed:

Fixed assets used in the Companys business or liabilities contracted have not been identified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments. The Company believes that currently it is not practicable to provide segment disclosures relating to total assets and liabilities.

6. Related party transactions:

Related party disclosure as required by Accounting Standard - 18. Related Party Disclosures issued By The Institute of Chartered Accountants of India are given below :

A Name and Relationship of the Related Parties :

3(a) Subsidiary

Suyash Laboratories Ltd.

3(b) Associates & Joint Ventures

Huanggang Yinhe Aarti Pharmaceutical Co.Ltd.

3(c) Individuals owning directly or indirectly, an interest in the voting power of the reporting enterprise that gives them control or significant influence over the enterprise, and relatives of such individual.

1. Individuals

Mr. Chandrakant V. Gogri Mr. Rajendra V. Gogri

2. Relatives of Individuals

Mrs.Jaya C. Gogri Mr.Rashesh C. Gogri

Mrs.Dhanvanti V. Gogri Mrs.Aarti R. Gogri

Mirik R. Gogri Mr.Renil R. Gogri

Mrs. Hetal Gogri Gala Mrs. Indira M. Dedhia

3(d) Key Management personel alongwith their relatives have significant influence.

1. Key Management Personel

Mr. Prakash M. Patil Mr. Harit. P. Shah

Mr. Harshit M. Savla Mr. Uday M. Patil

1. Relatives of Key Management Personel

Mrs. Priti P. Patil Mrs. Seema H. Savla

Mr. Arun M. Patil Ms. Bhoomi S. Savla

Dr. Vikas M. Patil Vishwa H. Savla

Mr. Adhish P. Patil Mrs. Jayashree H. Shah

Mrs. Arati T. Sankhe Mr. Pragji M. Shah

Mrs. Kalika A. Mishra Mrs. Kesarben P. Shah

Mr. Sameer P. Shah

3(e) Enterprise/firms over which controlling individuals have significant influence.

1. Aarti Industries Ltd.

2. Aarti Healthcare Ltd.

3. Rupal Drugs Ltd.

Note : Sr. 3(a),3(b),3(c),3(d),3(e) refer to the relevant paras of AS 18.

c) The timing of the accrual and accounting of Directors Commission has been changed from the date of the approval of the financial statements for the year by the shareholders to the balance sheet date of the concerned financial year. The directors commission of Rs. 92,43,764/- for the year ended March 31, 2010 has been provided in the financial statements for the year ended on that date. These financial statements have also been charged with the directors commission of Rs.47,99,477/- for the year ended March 31, 2009, approved in the Annua) General Meeting held on August 1, 2009. Due to this, the Net Profit for the year and the Reserves are stated lower, and the Current Liabilities and Provisions higher, by Rs.92,43,764/-.

7. Foreign exchange fluctuation

Foreign exchange gain/(loss) included in Profit & Loss Account Rs.128.32 lakhs (previous year Rs.939.29 lakhs)

8. Employee Benefits:

Defined Benefit Plan

The employees gratuity fund scheme managed by Life Insurance of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

9. The company has received money through the conversion of 4,00,000 warrants issued on preferential basis into equity shares of Rs.2,10,40,000 during the year, and the money has been utilized for the purposes as stated in the "Objects of the issue" i.e." to augment the long term funds to meet on going capital expenditure and long term working capital requirements

10. Figures of the previous year have been regrouped and rearranged wherever necessary.

 
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