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Notes to Accounts of Ajanta Pharma Ltd.

Mar 31, 2016

1 General Information:

Ajanta Pharma Limited ("the Company") is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. The Company is specialty focused Pharmaceutical Company developing, producing and marketing a wide range of branded and generic formulations.

2 Commitments:

a) Estimated amounts of contracts remaining to be executed on capital account and not provided for, net of advances Rs. 103.66 Crore (Pr. Yr. Rs. 9.69 Crore).

b) Other Commitments – Non-cancellable operating leases (Refer note 38).

3 The Company has one segment of activity namely "Pharmaceuticals".

4 Pre-operative expenses pending capitalisation included in Capital Work-In-Progress (Refer note 12) represent direct attributable expenditure for setting up of plants prior to the date of commencement of commercial production. The same will be capitalised on completion of projects and commencement of commercial operations. The details of pre-operative expenses are:

5 Employee Benefits

As required by Accounting Standard-15 ''Employee Benefits'' the disclosures are as under:

5.1 Defined Contribution Plans

The Company offers its employees defined contribution plans in the form of Provident Fund (PF) and Employees'' Pension Scheme (EPS) with the government, and certain state plans such as Employees'' State Insurance (ESI). PF and EPS cover substantially all regular employees and the ESI covers certain employees. Contributions are made to the Government''s funds. While both the employees and the Company pay predetermined contributions into the Provident Fund and the ESI Scheme, contributions into the Pension fund is made only by the Company. The contributions are normally based on a certain proportion of the employee''s salary. During the year, the Company has recognised the following amounts in the Account:

5.2 Defined Benefit Plans

Gratuity: The Company makes annual contributions to Employees'' Group Gratuity-cum Life Assurance (Cash Accumulation) Scheme of LIC, a funded defined benefit plan for qualifying employees. The scheme provides for payment to vested employees as under:

5.2.1. On normal retirement / early retirement / withdrawal / resignation:

As per the provisions of Payments of Gratuity Act, 1972 with vesting period of 5 years of service.

5.2.2. On the death in service:

As per the provisions of Payment of Gratuity Act, 1972 without any vesting period.

Death Benefit: The Company provides for death benefit, a defined benefit plan (death benefit plan) to certain categories of employees. The death benefit plan provides a lump sum payment to vested employees on death, being compensation received from the insurance company and restricted to limits set forth in the said plan. The death benefit plan is non funded.

5.3 Leave Encashment:

The Company''s employees are entitled for compensated absences which are allowed to be accumulated and encashed as per the Company''s rule. The liability of compensated absences, which is non-funded, has been provided based on report of independent actuary using "Projected Unit Credit Method".

Accordingly Rs. 3.29 Crore (Pr. Yr. Rs. 4.86 Crore) being liability as at the year-end for compensated absences as per actuarial valuation has been provided in the accounts.

6 Employees Stock Options Scheme (''ESOS'')

The Company has implemented "Employees Stock Options Scheme 2011" (''ESOS – 2011'') as approved in earlier year by the shareholders of the Company and the Compensation committee of Board of Directors.

During the year 9,000 options have been granted by the Company under the aforesaid ESOS – 2011 to the employees of the Company and of the wholly owned subsidiaries of the Company.

The options are granted at an exercise price which is in accordance with the relevant SEBI guidelines in force, at the time of such grants. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of Rs. 2/- each.

7. Disclosure for operating leases under Accounting Standard 19-" Leases":

The Company has taken various residential /godowns / office premises (including furniture and fittings, therein as applicable) under operating lease or leave and licence agreements. These are generally cancellable and range between 11 months and 5 years under leave and licence, or longer for other leases and are renewable by mutual consent on mutually agreeable terms. The company has given refundable interest free security deposits in accordance with the agreed terms. The lease payments of Rs. 8.37 Crore (Pr. Yr. Rs. 5.45 Crore) are recognised in the Statement of Proft and Loss under "Rent" under Note 29.

The future lease payments and payment profile of non cancellable operating leases are as under:

8. Excise duty includes Rs. 0.12 Crore (Pr. Yr. Rs. 0.13 Crore) being net impact of the excise duty provision on opening and closing stock.

9. Research and Development expenditure:

Revenue expenses on research and development incurred during the year except depreciation are as under:

10 Related party disclosure as required by Accounting Standards 18 are given below: -

A) Relationships:

Category I- Subsidiaries:

Ajanta Pharma (Mauritius) Ltd (APML)

Ajanta Pharma Mauritius International Ltd (APMIL)

Ajanta Pharma Nigeria Limited (APNL)

Ajanta Pharma USA Inc (APUI)

Ajanta Pharma Philippines Inc. (APPI)

Ajanta Pharma UK Ltd (AP UK)

Category II- Associate Company:

Turkmenderman Ajanta Pharma Ltd. (TDAPL)

Category III- Directors, Key Management Personnel & their Relatives:

Mr. Mannalal B. Agrawal Chairman

Mr. Purushottam B. Agrawal Executive Vice Chairman

Mr. Madhusudan B. Agrawal Executive Vice-Chairman

Mr. Yogesh M. Agrawal Managing Director

Mr. Rajesh M. Agrawal Joint Managing Director

Mr. Arvind Agrawal Chief Financial Ofcer

Mr. Gaurang Shah Company Secretary & Relatives of Key Management Personnel

Category IV-Enterprise over which persons covered under Category III above are able to exercise significant control:

Gabs Investment Private Limited

Louroux Bio Energies Limited

Inspira Projects Limited

Inspira Infra (Aurangabad) Limited

Seth Bhagwandas Agarwal Charitable Trust

Ganga Exports

11 Note on hedge and unhedged foreign currency assets and liabilities:

During the year, the Company has entered into forward exchange contract, being derivative instruments for hedge purpose and not intended for trading or speculation purposes, to establish the amount of currency in Indian Rupees required or available at the settlement date of certain payables and receivables. The following are the outstanding foreign currency forward contracts entered into by the Company:

12 The Company has not granted any loan or advances in the nature of loans, as stipulated in Regulation 34(3) and 53(f) read with Schedule V of Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015. For this purpose, the loans to employees as per the Company''s policy, security deposits paid towards premises taken on leave and license basis have not been considered. Hence, there are no investments by loans in the shares of the Parent Company and/or subsidiary companies.

Until 31st March 2015, the company accounted for sales returns on actual returns. During the year ended 31st March 2016, in line with an opinion of Expert Advisory Committee of the Institute of Chartered Accountants of India on accounting for sales returns, the company has revised its approach by accounting for anticipated sales returns and has recorded a cumulative provision for anticipated sales returns as at 31st March 2016 by charging it to Statement of Profit and Loss.

13 Turkmenderman Ajanta Pharma Ltd, an associate company, operates under severe restriction that significantly impairs its ability to transfer the funds. Company has been making efforts to divest this investment since last few years without any success. During the preceding financial year ended 31st March 2015, the Company has fully provided Rs. 6.95 Crore, being permanent diminution in value of said investment which has been shown under exceptional item.

14 Previous year''s figures are regrouped and recasted wherever required. Amount less than Rs. 50,000/- are shown at actual.


Mar 31, 2015

1. GENERAL INFORMATION

Ajanta Pharma Limited ("the Company") is a public company domiciled in India. The Company is speciality focused Pharmaceutical Company developing, producing and marketing a wide range of branded and generic formulations.

1.2 Terms/Rights attached to equity shares

The Company has only one class of equity shares with voting rights having a par value of Rs. 2 (Pr. Yr. Rs. 5) per share. The Company declares and pays dividends in Indian Rupees. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting.

During the year ended 31st March 2015, amount of per share dividend recommended as distributions to equity shareholders is Rs. 6/- on FV of Rs. 2/- each (Pr.Yr. Rs. 10 on FV of Rs. 5/- each).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the numbers of equity shares held by shareholders.

2.1 Term loans are secured by first charge on all fixed assets of the Company and second charge on entire current assets of the Company, present & future, on pari passu basis in addition to personal guarantee of some of the directors.

2.2 Term Loans from banks are repayable in 9 equal quarterly installments up to 28thJune 2017 and the rate of interest vary between 4% p.a. to 11.50% p.a. (Pr.Yr. 4% p.a. to 11.50% p.a.).

2.3 Deferred Sales Tax Loan is interest free and payable in 5 equal installments after expiry of initial 10 years moratorium period from each such year of deferral period from 2000-01 to 2012-13.

3.1 Working capital loans are secured by first charge on all current assets and second charge on all fixed assets of the Company on pari passu basis in additions to the personal guarantee of some of the directors.

4. COMMITMENTS

a) Estimated amounts of contracts remaining to be executed on capital account and not provided for, net of advances Rs. 9.69 Crore ( Pr.Yr. Rs. 48.06 Crore).

b) Other Commitments - Non-cancellable operating leases (Refer note 40).

5. CONTINGENT LIABILITIES

Rs in Crore

Particulars 31 March 2015 31 March 2014

i. Claims against the Company not acknowledged as debt* 0.70 0.70

ii. Sales tax demands disputed by Company pending in appeal* 0.22 0.22

iii. Custom Duty on import under Advance License Scheme, pending fulfilment of 4.46 1.39 Exports obligation.

iv. Disputed Octroi. Amount paid under protest Rs 0.52 Crore (Pr. Yr. Rs 0.52 Crore)* 0.52 0.52

v. Excise duty disputed by the Company Amount paid under protest Rs 0.25 Crore 0.34 0.34 (Pr. Yr. Rs 0.25 Crore)*

vi. Unpaid allotment money in respect of

(a) Shares of Ajanta Pharma UK Ltd, wholly owned subsidiary, equivalent to 0.09 0.10

UK Pound 10,000 (Pr.Yr. UK Pound 10,000).

(b) Ordinary Shares of Ajanta Pharma Nigeria Ltd., wholly owned 0.13 Nil subsidiary, equivalent to 0.41 Crore Nigerian Naira (Pr. Yr. Nil).

* The management has been advised that the demand is likely to be either deleted or substantially reduced and accordingly no provision is considered necessary.

Future cash outflows in respect of liability under clause (i) is dependent on terms agreed upon with the parties, in respect of clauses (ii) to (v) is dependent on decisions by relevant authorities of respective disputes and in respect of clause (vi) it is dependent on call made by investee companies.

6. The Board of Directors have recommended dividend of Rs. 6/- per equity share of FV Rs. 2/-(Pr.Yr. Rs. 10 per equity share of FV Rs. 5/-), which is subject to approval of shareholders.

7. Disclosure of trade payables to Micro, Small & Medium Enterprises under current liabilities is based on the information available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006". Amount outstanding as on 31st March 2015 to Micro, Small and Medium Enterprises on account of principal amount aggregate to Rs. 1.20 Crore (Pr.Yr. Rs. 1.62 Crore) [including overdue amount of Rs. 0.43 Crore (Pr.Yr. Rs. 0.88 Crore)] and interest due thereon is Rs. 0.16 Crore (Pr.Yr. Rs. 0.20 Crore) and interest paid during the year Rs. Nil (Pr.Yr. Rs. Nil). As per the terms/ understanding with the parties, no interest is payable and hence no provision has been made for the same.

8. The Company has one segment of activity namely "Pharmaceuticals".

9. EMPLOYEE BENEFITS

As required by Accounting Standard-15 ''Employee Benefits'' the disclosures are as under:

9.1. Defined Contribution Plans

The Company offers its employees defined contribution plans in the form of Provident Fund (PF) and Employees'' Pension Scheme (EPS) with the government, and certain state plans such as Employees'' State Insurance (ESI). PF and EPS cover substantially all regular employees and the ESI covers certain employees. Contributions are made to the Government''s funds. While both the employees and the Company pay predetermined contributions into the Provident Fund and the ESI Scheme, contributions into the Pension fund is made only by the Company. The contributions are normally based on a certain proportion of the employee''s salary. During the year, the Company has recognised the following amounts in the Account:

9.2. Defined Benefit Plans

Gratuity: The Company makes annual contributions to Employees'' Group Gratuity-cum Life Assurance (Cash Accumulation) Scheme of LIC, a funded defined benefit plan for qualifying employees. The scheme provides for payment to vested employees as under:

9.2.1. On normal retirement / early retirement / withdrawal / resignation:

As per the provisions of Payments of Gratuity Act, 1972 with vesting period of 5 years of service.

9.2.2. On the death in service:

As per the provisions of Payment of Gratuity Act, 1972 without any vesting period.

Death Benefit: The Company provides for death benefit, a defined benefit plan (death benefit plan) to certain categories of employees. The death benefit plan provides a lump sum payment to vested employees on death, being compensation received from the insurance company and restricted to limits set forth in the said plan. The death benefit plan is non funded.

9.3. Leave Encashment:

The Company''s employees are entitled for compensated absences which are allowed to be accumulated and encashed as per the Company''s rule. The liability of compensated absences, which is non-funded, has been provided based on report of independent actuary using "Projected Unit Credit Method".

Accordingly Rs.4.86 Crore (Pr.Yr. Rs. 3.15 Crore) being liability as at the year-end for compensated absences as per actuarial valuation has been provided in the accounts.

10. EMPLOYEES STOCK OPTIONS SCHEME (''ESOS'')

The Company has implemented "Employees Stock Options Scheme 2011" (''ESOS - 2011'') as approved in earlier year by the shareholders of the Company and the Compensation committee of Board of Directors.

The options are granted at an exercise price which is in accordance with the relevant SEBI guidelines in force, at the time of such grants. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of '' 2/- each.

11. DISCLOSURE FOR OPERATING LEASES UNDER ACCOUNTING STANDARD 19-" LEASES"

The Company has taken various residential / godowns / office premises (including furniture and fittings, therein as applicable) under operating lease or leave and licence agreements. These are generally cancellable and range between 11 months and 5 years under leave and licence, or longer for other leases and are renewable by mutual consent on mutually agreeable terms. The company has given refundable interest free security deposits in accordance with the agreed terms. The lease payments of Rs. 5.45 Crore (Pr.Yr. Rs. 3.75 Crore) are recognised in the Statement of Profit and Loss under "Rent" under Note 30.

12. Excise duty related to difference between closing and opening stock and other adjustments are stated under miscellaneous expenses. Excise duty related to turnover is reduced from the Gross Revenue from Operations.

13. I n terms of the requirements of the Accounting Standard-28 on "Impairment of Assets" issued by the Institute of Chartered Accountants of India, the amount recoverable against fixed assets has been estimated for the period by the management based on the present value of estimated future cash flows expected to arrive from the continuing use of such assets. The recoverable amount so assessed was found to be adequate to cover the carrying amount of the assets, therefore no provision for impairment in value thereof has been considered necessary by the management except in case of intangible assets where the provision for impairment amounting to Rs. Nil (Pr. Yr. Rs. 5.13) has been considered necessary during the year, as recoverable amount of such assets is less than carrying amount as stated in the books.

14. As per the best estimate of the management, no provision is required to be made as per Accounting Standard-29 "Provision, Contingent Liabilities and Contingent Assets" as notified by the Companies (Accounting Standards) Rules 2006, in respect of any present obligation as a result of a past event that could lead to a probable outflow of resources which would be required to settle the obligation.

15. NOTE ON HEDGE AND UNHEDGED FOREIGN CURRENCY ASSETS AND LIABILITIES

During the year, the Company has entered into forward exchange contract, being derivative instruments for hedge purpose and not intended for trading or speculation purposes, to establish the amount of currency in Indian Rupees required or available at the settlement date of certain payables and receivables. The following are the outstanding foreign currency forward contracts entered into by the Company:

16. The Company has not granted any loan/advances in the nature of loans, as stipulated in the clause 32 of the Listing Agreement with the Stock Exchanges. For this purpose, the loans to employees as per the Company''s policy, security deposits paid towards premises taken on leave and license basis have not been considered. Hence, there are no investments by loans in the shares of the Holding Company and/or subsidiary companies.

17. Depreciation for the year has been aligned to meet the requirements of Schedule II of the Companies Act, 2013 and accordingly an amount of Rs. 1.12 Crore (net of deferred tax of Rs. 0.58 Crore) in relation to assets where useful life has already expired as on 1st April 2014, has been charged to Retained Earnings.

18. Turkmenderman Ajanta Pharma Ltd, an associate company, operates under severe restriction that significantly impairs its ability to transfer the funds. Company has been making efforts to divest this investment since last few years without any success. Hence, during the year, Company has fully provided Rs. 6.95 Crore, being permanent diminution in value of said investment and is shown under exceptional item.

19. Consumption of consumable stores is wholly indigenous in the current and previous year.

20. Previous year''s figures are regrouped and recasted wherever required. Amount less than Rs. 50,000/- are shown at actual.


Mar 31, 2014

1. GENERAL INFORMATION:

Ajanta Pharma Limited ("the Company") is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 (as amended by the Companies Act, 2013). Its shares are listed on two stock exchanges in India. The Company is engaged in the business of pharmaceutical and related activities, including research.

2. COMMITMENTS:

a) Estimated amounts of contracts remaining to be executed on capital account and not provided for, net of advances H 48.06 Crore ( Pr.Yr. H 59.71 Crore).

b) Other Commitments – Non-cancellable operating leases (Refer note 40).

3. CONTINGENT LIABILITIES:

Rs. in Crore

Particulars 31 March 2014 31 March 2013

i. Claims against the Company not acknowledged as debt 0.70 0.34

ii. Income tax demands disputed by Company pending in appeal. Amount paid under Nil 3.69 protest H 1.82 Crore (Pr. Yr. Rs. 1.82 Crore)

iii. Sales tax demands disputed by Company pending in appeal 0.22 0.22

iv. Custom Duty on import under Advance License Scheme, pending fulfilment of 1.39 0.60 Exports obligation.

v. Disputed Octroi. Amount paid under protest 0.52 Crore (Pr. Yr. H 0.52 Crore) 0.52 0.52

vi. Excise duty disputed by the Company 0.34 0.16

vii. Unpaid allotment money in respect of

(a) Shares of Ajanta Pharma UK Ltd, wholly owned subsidiary, equivalent to UK 0.10 0.08 Pound 10,000 (Pr.Yr. UK Pound 10,000).

(b) Common Stock of Ajanta Pharma USA Inc., wholly owned subsidiary is Nil (Pr.Yr. Nil 0.54 USD 0.01 Crore).

Future cash outflows in respect of liability under clauses (i) is dependent on terms agreed upon with the parties, in respect of clauses (ii) to (vi) is dependent on decisions by relevant authorities of respective disputes and in respect of clause (vii) it is dependent on call made by investee companies.

4. The Board of Directors have recommended dividend of H 10 (Pr.Yr. H 6.25) per equity share of FV H 5 , which is subject to approval of shareholders.

5. Disclosure of trade payables to micro, Small & Medium Enterprises under current liabilities is based on the information available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006". Amount outstanding as on 31st March 2014 to Micro, Small and Medium Enterprises on account of principal amount aggregate to H 1.62 Crore (Pr.Yr. H 2.20 Crore) [including overdue amount of H 0.88 Crore (Pr.Yr. H 0.53 Crore)] and interest due thereon is H 0.20 Crore (Pr.Yr. H 0.11 Crore) and interest paid during the year H Nil (Pr.Yr. H Nil). As per the terms/ understanding with the parties, no interest is payable and hence no provision has been made for the same.

6. The Company has one segment of activity namely "Pharmaceuticals".

7.1. Defined Benefit Plans

Gratuity: The Company makes annual contributions to Employees'' Group Gratuity-cum Life Assurance (Cash Accumulation) Scheme of LIC, a funded defined benefit plan for qualifying employees. The scheme provides for payment to vested employees as under:

7.2.1. On normal retirement / early retirement / withdrawal / resignation:

As per the provisions of Payments of Gratuity Act, 1972 with vesting period of 5 years of service.

7.2.2. On the death in service:

As per the provisions of Payment of Gratuity Act, 1972 without any vesting period.

Death Benefit: The Company provides for death benefit, a defined benefit plan (death benefit plan) to certain categories of employees. The death benefit plan provides a lump sum payment to vested employees on death, being compensation received from the insurance company and restricted to limits set forth in the said plan. The death benefit plan is non funded.

Disclosures for defined benefit plans i.e. Gratuity (Funded Plan), based on actuarial reports as on 31st March 2014 are as under:

7.3. Leave Encashment:

The Company''s employees are entitled for compensated absences which are allowed to be accumulated and encashed as per the Company''s rule. The liability of compensated absences, which is non-funded, has been provided based on report of independent actuary using "Projected Unit Credit Method".

Accordingly H 3.15 Crore (Pr.Yr. H 2.77 Crore) being liability as at the year-end for compensated absences as per actuarial valuation has been provided in the accounts.

8. EMPLOYEES STOCK OPTIONS SCHEME (''ESOS'')

The Company has implemented "Employees Stock Options Scheme 2011" (''ESOS – 2011'') as approved in earlier year by the shareholders of the Company and the Compensation committee of Board of Directors.

During the year 3,000 options (pre Bonus) have been granted by the Company under the aforesaid ESOS – 2011 to the employees of the wholly owned subsidiary of the Company. Expenditure for the year relating to such grant amounting to H 0.12 Cr have been recovered by debiting to the wholly owned subsidiary.

9. Excise duty related to difference between closing and opening stock and other adjustments are stated under other expenses. Excise duty related to turnover is reduced from the Gross Revenue from Operations.

10. In terms of the requirements of the Accounting Standard-28 on "Impairment of Assets" issued by the Institute of Chartered Accountants of India, the amount recoverable against fixed assets has been estimated for the period by the management based on the present value of estimated future cash flows expected to arrive from the continuing use of such assets. The recoverable amount so assessed was found to be adequate to cover the carrying amount of the assets, therefore no provision for impairment in value thereof has been considered necessary by the management except in case of intangible assets where the provision for impairment amounting to H 5.13 Crore (Pr. Yr. Nil) has been considered necessary during the year, as recoverable amount of such assets is less than carrying amount as stated in the books.

11. As per the best estimate of the management, no provision is required to be made as per Accounting Standard-29 "Provision, Contingent Liabilities and Contingent Assets" as notified by the Companies (Accounting Standards) Rules 2006, in respect of any present obligation as a result of a past event that could lead to a probable outflow of resources which would be required to settle the obligation.

12. The Company has not granted any loan/advances in the nature of loans, as stipulated in the clause 32 of the Listing Agreement with the Stock Exchanges. For this purpose, the loans to employees as per the Company''s policy, security deposits paid towards premises taken on leave and license basis have not been considered. Hence, there are no investments by loans in the shares of the Parent Company and/or subsidiary companies.

13. Consumption of consumable stores is wholly indigenous in the current and previous year.

14. Consequent to the change in the accounting policy in FY 2012-13, expenses on sales promotion materials was charged to the revenue in the year of incurrence instead of valuing inventory of sales promotion materials at cost, resulting into profit before tax for the previous year being lower by H 0.41 Crore.

15. Previous year''s figures are regrouped and recasted wherever required. Amount less than H 50,000 are shown at actual.


Mar 31, 2013

1. GENERAL INFORMATION

Ajanta Pharma Limited ("the Company") is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The Company is engaged in the business of pharmaceutical and related activities, including research.

2. The Board of Directors have recommended dividend of Rs.6.25 per equity share of FV Rs.5/- (Pr. Yr. Rs.7.50 per equity share of FV Rs.10/-), which is subject to approval of shareholders.

3. In response to relevant notices issued underthe Income TaxAct,1961, the Company has filed its returns of income revising income of earlier years, resulting into additional income tax liability of Rs.15.75 Crore, consequently reducing MAT Credit Entitlement of earlier years to that extent.

4. Disclosure of trade payables to micro; Small & Medium Enterprises under current liabilities is based on the information available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006". Amount outstanding as on 31 March 2013 to Micro, Small and Medium Enterprises on account of principal amount aggregate to Rs.2.20 Crore (Pr.Yr. Rs.2.68 Crore) [including overdue amount of Rs.0.53 Crore (Pr.Yr. Rs.0.60 Crore)] and interest due thereon is Rs.0.11 Crore (Pr.Yr. Rs.0.10 Crore) and interest paid during the year Rs.Nil (Pr.Yr. Rs.Nil). As per the terms/ understanding with the parties, no interest is payable and hence no provision has been made for the same.

5. The Company has one segment of activity namely "Pharmaceuticals".

6. Employee Benefits

As required by Accounting Standard-15 ''Employee Benefits'' the disclosures are as under:

6.1. Defined Contribution Plans

The Company offers its employees defined contribution plans in the form of Provident Fund (PF) and Employees'' Pension Scheme (EPS) with the government, and certain state plans such as Employees'' State Insurance (ESI). PF and EPS cover substantially all regular employees and the ESI covers certain employees. Contributions are made to the Government''s funds. While both the employees and the Company pay predetermined contributions into the Provident Fund and the ESI Scheme, contributions into the Pension fund is made only by the Company. The contributions are normally based on a certain proportion of the employee''s salary. During the year, the Company has recognised the following amounts in the Account:

6.2. Defined Benefit Plans

Gratuity: The Company makes annual contributions to Employees'' Group Gratuity-cum Life Assurance (Cash Accumulation) Scheme of LIC, a funded defined benefit plan for qualifying employees. The scheme provides for payment to vested employees as under:

6.2.1. On normal retirement / early retirement / withdrawal / resignation:

As per the provisions of Payments of Gratuity Act, 1972 with vesting period of 5 years of service.

6.2.2. On the death in service:

As per the provisions of Payment of Gratuity Act, 1972 without any vesting period.

Death Benefit: The Company provides for death benefit, a defined benefit plan (death benefit plan) to certain categories of employees. The death benefit plan provides a lump sum payment to vested employees on death, being compensation received from the insurance company and restricted to limits setforth in the said plan. The death benefit plan is non funded.

The estimate of future increase in compensation levels, considered in the actuarial valuation, have been taken on account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

6.3. Leave Encashment:

The Company''s employees are entitled for compensated absences which are allowed to be accumulated and encashed as per the Company''s rule. The liability of compensated absences has been provided based on report of independent actuary using "Projected Unit Credit Method".

Accordingly Rs.2.77 Crore (Pr.Yr. Rs.2.24 Crore) being liability as at the year-end for compensated absences as per actuarial valuation has been provided in the accounts.

7. Employees Stock Options Scheme (''ESOS'')

The Company has implemented "Employees Stock Options Scheme 2011" (''ESOS - 2011'') as approved in earlier year by the shareholders of the Company and the Compensation committee of Board of Directors. No options have been granted by the Company under the aforesaid ESOS - 2011 during the year.

The options are granted at an exercise price which is in accordance with the relevant SEBI guidelines in force, at the time of such grants. Each option entitles the holder to exercises the right to apply for and seek allotment of one equity share of Rs.5/- each.

* Following the stock split from Rs.10/- to Rs.5/- per share (Refer note 30) as approved by the shareholders on 7 July 2012, the number of options granted and outstanding have been revised to 56,000 (FV 5/-) as on 7 July 2012 and consequently each option entitles an employee to subscribe to one equity share of the Company at revised exercise price of Rs.5/- per share.

8. Disclosure for operating leases under Accounting Standard 19-" Leases"

The Company has taken various residential /godowns / office premises (including furniture and fittings, therein as applicable) under operating lease or leave and licence agreements. These are generally cancellable and range between 11 months and 5 years under leave and licence, or longer for other leases and are renewable by mutual consent on mutually agreeable terms. The company has given refundable interest free security deposits in accordance with the agreed terms. The lease payments of Rs.3.55 Crore (Pr.Yr. Rs.3.45 Crore) are recognised in the Statement of Profit and Loss under "Rent" under Note 29.

9. Excise duty related to difference between closing and opening stock and other adjustments are stated under other expenses. Excise duty related to turnover is reduced from the Gross Revenue from Operations.

10. In terms of the requirements of the Accounting standards-28 on "Impairment of Assets" issued by the Institute of Chartered Accountants of India, the amount recoverable against Fixed Assets has been estimated for the period by the management based on present value of estimated future cash flows expected to arise from the continuing use of such assets. The recoverable amount so assessed was found to be adequate to cover the carrying amount of the assets, therefore no provision for impairment in value thereof has been considered necessary, by the management.

11. As per the best estimate of the management, no provision is required to be made as per Accounting Standard (AS) 29 "Provision, Contingent Liabilities and Contingent Assets" as notified by the Companies (Accounting Standards) Rules 2006, in respect of any present obligation as a result of a past event that could lead to a probable outflow of resources which would be required to settle the obligation.

12. Note on hedge and unhedged foreign currency assets and liabilities:

During the year, the Company has entered into forward exchange contract, being derivative instruments for hedge purpose and not intended for trading or speculation purposes, to establish the amount of currency in Indian Rupees required or available at the settlement date of certain payables and receivables. There are no forward Exchange Contracts outstanding as at the year end.(Pr.Yr. Forward contract to sell USD 0.10 Crore). The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are as below:

13. The Company has not granted any loan/advances in the nature of loans, as stipulated in the clause 32 of the Listing Agreement with the Stock Exchanges. For this purpose, the loans to employees as per the Company''s policy, security deposits paid towards premises taken on leave and license basis have not been considered. Hence, there are no investments by loans in the shares of the Parent Company and/or subsidiary companies.

14. Consumption of consumable stores is wholly indigenous in the current and previous year.

15. Consequent to the change in accounting policy relating to sales promotional materials (Refer note 2.2), profit before tax for the current year is lower by Rs.0.41 Crore.

16. Previous year''s figures are regrouped and recasted wherever required. Amount less than 50,000/- are shown at actual.

 
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