Notes to Accounts of Ajanta Pharma Ltd.
Mar 31, 2023
22.8 Equity shares extinguished on buy-back
Current year
The Board of Directors of the Company, at its meeting held on 10 March 2023 has approved the proposal of Buy-back of 2,210,500 fully paid-up equity shares of the Company of face value of H 2 each at a price of H 1,425/- per equity share, on a proportionate basis, for an aggregate amount not exceeding H 315.00 Crore through the tender offer process ("Buyback"), in accordance with the provisions of the Companies Act, 2013, and rules made thereunder, and the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018 (the "SEBI Buyback Regulations"). The buyback issue opened on 31 March 2023 and closed on 10 April 2023. The Company has taken the impact of buyback in current financial year and for this Company has utilised its General Reserve (H 315.00 Crore) for the buyback of its equity shares. Total transaction cost of H 1.44 Crore incurred towards buyback and tax of H 73.28 Crore was offset from retained earnings. In accordance with Section 69 of the Companies Act, 2013, the Company has created Capital Redemption Reserve of H 0.44 Crore equal to the nominal value of the shares bought back as an appropriation from the General Reserve.
Previous years
The Board of Directors of the Company, at its meeting held on 28 December 2021 had approved a proposal to buyback up to 1,120,000 equity shares of the Company for an aggregate amount not exceeding H 285.60 Crore being 1.29% of the total paid up equity share capital at H 2,550 per equity share. A Letter of Offer was made to all eligible shareholders. The Company bought back 1,120,000 equity shares out of the shares that were tendered by eligible shareholders and extinguished the equity shares bought back on 28 February 2022. The Company has utilised its Securities Premium (H 0.54 Crore) and General Reserve (H 285.06 Crore) for the buyback of its equity shares. Total transaction cost of H 2.02 Crore incurred towards buyback and tax of H 66.48 Crore was offset from retained earnings. In accordance with Section 69 of the Companies Act, 2013, the Company has created Capital Redemption Reserve of H 0.22 Crore equal to the nominal value of the shares bought back as an appropriation from the General Reserve.
The Company bought back 735,000 equity shares for an aggregate amount not exceeding of H 136 Crore being 0.84% of the total paid up equity share capital at H 1,850 per equity share. The equity shares bought back were extinguished on 30 December 2020.
The Company bought back 769,230 equity shares for an aggregate amount not exceeding of H 100 Crore being 0.87% of the total paid up equity share capital at H 1,300 per equity share. The equity shares bought back were extinguished on 26 March 2019.
Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return (EBIT) on capital, as well as the level of dividends to equity shareholders. The Company''s objective for capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans.
Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return (EBIT) on capital, as well as the level of dividends to equity shareholders. The Company''s objective for capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans.
46.1 Defined contribution plans
The Company offers its employee''s 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 administered 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. The Company does not have any liability beyond depositing these amounts in to the government administered fund. During the year, the Company has made the following contributions:
|
H in Crore |
||
|
Particulars |
Year ended 31 March 2023 |
Year ended 31 March 2022 |
|
Provident fund and employee''s pension scheme |
29.75 |
26.89 |
|
Employees state insurance and others |
0.77 |
0.78 |
|
Total |
30.52 |
27.67 |
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 Companies scheme provides for payment to vested employees as under:
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 with a maximum limit of H 0.20 Crore.
On the death in service:
As per the provisions of Payment of Gratuity Act, 1972 without any vesting period.
The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at 31 March 2023. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
46.1 Defined contribution plans
The Company offers its employee''s 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 administered 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. The Company does not have any liability beyond depositing these amounts in to the government administered fund. During the year, the Company has made the following contributions:
|
H in Crore |
||
|
Particulars |
Year ended 31 March 2023 |
Year ended 31 March 2022 |
|
Provident fund and employee''s pension scheme |
29.75 |
26.89 |
|
Employees state insurance and others |
0.77 |
0.78 |
|
Total |
30.52 |
27.67 |
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 Companies scheme provides for payment to vested employees as under:
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 with a maximum limit of H 0.20 Crore.
On the death in service:
As per the provisions of Payment of Gratuity Act, 1972 without any vesting period.
The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at 31 March 2023. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
Although the analysis does not take into account full distribution of cash flows expected under the plan, it does provide an approximation of sensitivity of assumptions. 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.
The Company''s employees are entitled for compensated absences which are allowed to be accumulated and encashed as per the Company''s policies. 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 27.14 Crore (Previous Year H 23.85 Crore) being liability as at the year-end for compensated absences as per actuarial valuation has been provided in the accounts.
Company has established "Employees Stock Option Scheme 2011" (''ESOS - 2011'') and Share based Incentive Plan 2019 as approved in earlier year by the shareholders of the Company and Compensation committee of Board of Directors for key Employees of the Group. The options issued under the above scheme vest in a phased manner.
Valuation of stock options
The fair value of stock options granted during the period has been measured using the Black-Scholes option pricing model at the date of the grant. The Black-Scholes option pricing model includes assumptions regarding dividend yields, expected volatility, expected terms and risk free interest rates. They key inputs and assumptions used are as follows:
Share price: The closing price on NSE as on the date of grant has been considered for valuing the options granted.
Exercise Price: Exercise Price is the market price or face value or such other price as determined by the Remuneration and Compensation Committee.
Expected Volatility: The historical volatility of the stock till the date of grant has been considered to calculate the fair value of the options.
Expected Option Life: Expected Life of option is the period for which the Company expects the options to be live. The minimum life of a stock option is the minimum period before which the options cannot be exercised and the maximum life is the period after which the options cannot be exercised.
Expected dividends: Expected dividend yield has been calculated as an average of dividend yields for four years preceding the date of the grant.
Risk free interest rate: The risk-free interest rate on the date of grant considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero-coupon yield curve for Government Securities.
These assumptions reflect management''s best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside of the Company''s control. As a result, if other assumptions had been used in the current period, stock-based compensation expense could have been materially impacted. Further, if management uses different assumptions in future periods, stock-based compensation expense could be materially impacted in future years. The Company has granted stock options to employees of a subsidiary, the estimated fair value of stock options issued are included in the carrying value of the investment in the said subsidiary on a straight-line basis over the requisite service period of each separately vesting portion of the award.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes mutual funds that have declared buyback NAV. The mutual funds are valued using the closing NAV.
Level 2: The fair value of financial instruments that are not traded in an active market (like Mark to market derivatives, Nonconvertible debentures and Non-convertible market link debenture) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value as instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. Measurement of fair values:
Valuation techniques and significant unobservable inputs:
The following tables show the valuation techniques used in measuring Level 2 fair values, for financial instruments measured at fair value in the statement of financial position, as well as the significant unobservable inputs used:
Company has exposure to following risks arising from financial instruments:
⢠credit risk
⢠liquidity risk
⢠market risk
⢠currency risk
Risk management framework
Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. Management is responsible for developing and monitoring the Company''s risk management policies, under the guidance of Audit Committee.
Company''s risk management policies are established to identify and analyse the risks faced by it, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities. Company, through its training and procedures aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
Company''s Audit committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit committee.
i. Credit risk
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and mutual funds, foreign exchange transactions and other financial instruments.
The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.
65% (Previous Year 70%) of total receivables is from wholly owned subsidiaries.
Sales to certain jurisdictions are either based on advance payments or restricted to certain limits to curtail exposures to credit risk.
Expected credit loss assessment
The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgement.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of impairment of trade receivables do not reflect any significant credit losses. Given that the macroeconomic indicators affecting customers of the Company have not undergone any substantial change, the Company expects the historical trend of minimal credit losses to continue. The trend of the bad debts is negligible.
a) Trade receivables
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Trade receivables, which are non-interest bearing, are mainly from stockists, distributors and customers and are generally on 14 days to 270 days credit term excluding wholly owned subsidiaries. Outstanding customer receivables are regularly monitored. The Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically.
As at 31 March 2023, Company had 37 customers, excluding wholly owned subsidiaries (31 March 2022: 32 customers) that owed the Company more than H 0.50 Crore each and accounted for approximately 26% and 22% respectively of the total outstanding as at 31 March 2023 and 31 March 2022.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively.
During the year impairment gain has been recognised due to write-back of allowance of trade receivable. b) Financial instruments
Company limits its exposure to credit risk by investing in liquid securities issued by mutual funds having a credit ranking of at least 3 and above from CRISIL or equivalent rating agency. Company monitors changes in credit risk by tracking published external credit ranking. Based on its on-going assessment of counterparty risk, the Company adjusts its exposure to various counterparties.
ii. Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company''s objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including bilateral loans, debt, and overdraft from banks at an optimised cost. Working capital requirements are adequately addressed by internally generated funds. Trade receivables are kept within manageable levels.
Company aims to maintain the level of its cash and cash equivalents and other highly marketable debt investments at an amount in excess of expected cash outflows on financial liabilities over the next six months. The ratio of cash and cash equivalents and other highly marketable debt investments to outflows is 0.86 at 31 March 2023 (0.56 at 31 March 2022).
iii. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments.
The Company''s activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative financial instruments such as foreign exchange contracts to manage its exposures to foreign exchange fluctuations. All such transactions are carried out within the guidelines set by the risk management committee.
iv. Currency risk
Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchases and borrowings are denominated and the functional currency of Company. The currencies in which these transactions are primarily denominated are US dollars, Australian dollars, Great Britain Pound and Euro.
At any point in time, Company covers foreign currency risk by taking appropriate percentage of its foreign currency exposure, as approved by risk management committee in line with the laid down policy approved by the Board. Company uses forward exchange contracts to mitigate its currency risk, most with a maturity of less than one year from the reporting date. In respect of other monetary assets and liabilities denominated in foreign currencies, the Company''s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.
The operations of the Company are limited to only one segment viz. pharmaceuticals and related products. Revenue from contract with customers is from sale of manufactured goods. Sale of goods are made at a point in time and revenue is recognised upon satisfaction of the performance obligations which is typically upon dispatch/delivery. The Company has a credit evaluation policy based on which the credit limits for the trade receivables are established. There is no significant financing component as the credit period provided by the Company is not significant.
51. DISCLOSURE FOR LEASES UNDER IND AS 116 - âLEASE"
Company has taken various premises under operating lease. These are generally cancellable and ranges from 11 months to 5 years and are renewable by mutual consent on mutually agreeable terms. Some of these lease agreements have price escalation clauses. There are no restrictions imposed by these lease arrangements and there are no sub leases. There are no contingent rents. A single discount rate has been applied to a portfolio of leases with reasonably similar characteristics.
|
52. CONTINGENT LIABILITIES AND COMMITMENTS Contingent Liabilities |
H in Crore |
|
|
Particulars |
As at 31 March 2023 |
As at 31 March 2022 |
|
i. Claims against the Company not acknowledged as debt |
0.61 |
0.61 |
|
ii. Custom Duty on import under Advance License Scheme, pending fulfilment of Exports obligation. |
2.32 |
5.22 |
|
iii. Disputed Octroi. Amount paid under protest and included under "Other Current Assets" H 0.52 Crore (Previous Year H 0.52 Crore) |
0.52 |
0.52 |
|
iv. Excise duty, Service Tax, VAT and GST disputed by the Company |
1.10 |
0.93 |
The Company has three ongoing patent litigations as on 31 March 2023. No liability is expected to arise from these litigations.
The Company does not expect the outcome of the matters stated above to have a material adverse impact on the Company''s financial condition, results of operations or cash flows.
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 (iv) is dependent on decisions by relevant authorities of respective disputes.
The new Code on Social Security, 2020 (Code) has been enacted, which could impact the contributions by the Company towards Provident Fund and Gratuity. The effective date from which the changes are applicable is yet to be notified and the rules are yet to be framed. The Company will complete its evaluation and will give appropriate impact in its financial statements in the period in which the Code becomes effective and the related rules are published.
Estimated amounts of contracts remaining to be executed on capital account and not provided for, net of advances H 86.97 Crore (Previous Year H 69.16 Crore).
Based on the internal and external transfer pricing review and validation, the Company believes that all transactions with associated enterprises are undertaken on the basis of arm''s length principle. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. Details related to ESOP given to Employees of Subsidiary provided in note 47
During the year, Ajanta Pharma (Mauritius) International Limited, a wholly owned subsidiary of Ajanta Pharma (Mauritius) Limited, was wound up and removed from register of companies u/s 308 of the Companies Act, 2001 (Mauritius) by Business registration department dated 27 September 2022.
A. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
B. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) 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
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
61. IMPAIRMENT OF INVESTMENT IN SUBSIDIARY
The Company in prior years has made full provision for investment in aggregate value of unquoted investment in Ajanta Pharma Nigeria Limited and the carrying value of investment is considered as Nil.
Rental income recognised in profit or loss for investment properties aggregates to H 0.35 Crore (Previous year H 0.01 Crore). Maintenance and other expenses aggregating to H 0.04 Crore (Previous year H 0.02 Crore). Fair value of Investment Properties aggregates to H 12.48 Crore as per registered valuer.
The Company has entered into agreement for sale of its investment properties, subject to fulfilment of certain conditions. Transaction is expected to be completed in the next 3 months. Pending fulfilment of such conditions, the said properties aggregating to H 7.92 Crore has been reclassified from investment properties to assets held for sale.
The charge relating to temporary differences during the year ended 31 March 2023 are primarily on account of property plant and equipment and gain on investment at FVTPL partially offset by provision for expired goods, provision for loss allowance, compensated absences. The credit to temporary differences during the year ended 31 March 2022 are primarily on account of property plant and equipment and gain on investment at FVTPL partially offset by provision for expired goods, provision for loss allowance, compensated absences. Current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same authority.
64. ADDITIONAL DISCLOSURES REQUIRED BY SCHEDULE III (AMENDMENTS DATED 24 MARCH 2021) TO THE COMPANIES ACT, 2013A. Relationship with struck off company
The Company has one transaction with the companies struck off under Companies Act, 2013 or Companies Act, 1956
⢠Name of the struck off company: Airtech Filters & Systems Private Limited
⢠Nature of transactions: Payable towards purchase of spare parts
⢠Balance outstanding: H 0.06 Crore
⢠Relationship with the struck off company (if any): No Relationship
There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
C. Utilisation of borrowings availed from banks
The borrowings obtained by the Company from banks have been applied for the purposes for which such loans were taken.
D. Details of benami property held
No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.
The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
F. Compliance with number of layers of companies
The Company has complied with the number of layers prescribed under the Companies Act, 2013.
G. Compliance with approved scheme(s) of arrangements
The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
H. Details of crypto currency or virtual currency
The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
Mar 31, 2022
21.8 Equity shares extinguished on buy-back Current year
The Board of Directors of the Company, at its meeting held on 28 December 2021 had approved a proposal to buyback upto 11,20,000 equity shares of the Company for an aggregate amount not exceeding '' 285.60 Crore being 1.29% of the total paid up equity share capital, at '' 2,550 per equity share. A Letter of Offer was made to all eligible shareholders. The Company bought back 11,20,000 equity shares out of the shares that were tendered by eligible shareholders and extinguished the equity shares bought back on 28 February 2022. The Company has utilised its Securities Premium ('' 0.54 Crore) and General Reserve ('' 285.06 Crore) for the buyback of its equity shares. Total transaction cost of '' 2.02 Crore incurred towards buyback and tax of '' 66.48 Crore was offset from retained earnings. In accordance with Section 69 of the Companies Act 2013, the Company has created Capital Redemption Reserve of '' 0.22 Crore equal to the nominal value of the shares bought back as an appropriation from the General Reserve.
Previous year
The Board of Directors of the Company, at its meeting held on 3 November 2020 had approved a proposal to buyback upto 7,35,000 equity shares capital, of the Company for an aggregate amount not exceeding '' 135.98 Crore being 0.84% of the total paid up equity share capital at '' 1,850 per equity share. A Letter of Offer was made to all eligible shareholders. The Company bought back 7,35,000 equity shares out of the shares that were tendered by eligible shareholders and extinguished the equity shares bought back on 30 December 2020. The Company has utilised its Securities Premium ('' 1.63 Crore) and General Reserve ('' 134.35 Crore) for the buyback of its equity shares. Total transaction cost of '' 0.78 Crore incurred towards buyback and tax of '' 31.64 Crore was offset from retained earnings. In accordance with Section 69 of the Companies Act 2013, the Company has created Capital Redemption Reserve of '' 0.15 Crore equal to the nominal value of the shares bought back as an appropriation from the General Reserve.
Companyâs policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return (EBIT) on capital, as well as the level of dividends to equity shareholders. The Companyâs objective for capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans.
As required by Ind AS 19 ''Employee Benefitsâ the disclosures are as under:
45.1 Defined contribution plans
The Company offers its employeeâs defined contribution plans in the form of provident fund (PF) and Employeesâ pension scheme (EPS) with the government, and certain state plans such as Employeesâ State Insurance (ESI). PF and EPS cover substantially all regular employees and the ESI covers certain employees. Contributions are made to the Governmentâs administered 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 employeeâs salary. The Company does not have any liability beyond depositing these amounts in to the government administered fund. During the year, the Company has made the following contributions:
45.2 Defined benefit plans Gratuity:
The Company makes annual contributions to Employeesâ 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:
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 with a maximum limit of '' 0.20 Crore.
As per the provisions of Payment of Gratuity Act, 1972 without any vesting period.
The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at 31 March 2022. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Companyâs financial statements as at the Balance Sheet date:
Although the analysis does not take into account full distribution of cash flows expected under the plan, it does provide an approximation of sensitivity of assumptions. 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.
The Companyâs employees are entitled for compensated absences which are allowed to be accumulated and encashed as per the Companyâs 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, '' 23.85 Crore (Previous Year '' 21.76 Crore) being liability as at the year-end for compensated absences as per actuarial valuation has been provided in the accounts.
Company has established "Employees Stock Option Scheme 2011" (''ESOS - 201T) and Share based Incentive Plan 2019 as approved in earlier year by the shareholders of the Company and Compensation committee of Board of Directors for key employees of the Group. The options issued under the above scheme vest in a phased manner.
The fair value of stock options granted during the period has been measured using the Black-Scholes option pricing model at the date of the grant. The Black-Scholes option pricing model includes assumptions regarding dividend yields, expected volatility, expected terms and risk free interest rates. They key inputs and assumptions used are as follows:
Share price: The closing price on NSE as on the date of grant has been considered for valuing the options granted. Exercise Price: Exercise Price is the market price or face value or such other price as determined by the Remuneration and Compensation Committee.
Expected Volatility: The historical volatility of the stock till the date of grant has been considered to calculate the fair value of the options.
expected option Life: Expected Life of option is the period for which the Company expects the options to be live. The minimum life of a stock option is the minimum period before which the options cannot be exercised and the maximum life
is the period after which the options cannot be exercised.
Expected dividends: Expected dividend yield has been calculated as an average of dividend yields for four years preceding the date of the grant.
Risk free interest rate: The risk free interest rate on the date of grant considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero coupon yield curve for Government Securities.
These assumptions reflect management''s best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside of the Company''s control. As a result, if other assumptions had been used in the current period, stock-based compensation expense could have been materially impacted. Further, if management uses different assumptions in future periods, stock-based compensation expense could be materially impacted in future years. The Company has granted stock options to employees of a subsidiary, the estimated fair value of stock options issued are included in the carrying value of the investment in the said subsidiary on a straight-line basis over the requisite service period of each separately vesting portion of the award.
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Level 1 : Level 1 hierarchy includes financial instruments measured using quoted prices. This includes mutual funds that have declared buyback NAV. The mutual funds are valued using the closing NAV.
Level 2 : The fair value of financial instruments that are not traded in an active market (like Mark to Market Derivatives and non-convertible debentures) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value as instrument are observable, the instrument is included in level 2.
Level 3 : If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. Measurement of fair values:
Valuation techniques and significant unobservable inputs:
The following table show the valuation techniques used in measuring Level 2 fair values, for financial instruments measured at fair value in the statement of financial position, as well as the significant unobservable inputs used:
Company has exposure to following risks arising from financial instruments:
⢠credit risk
⢠liquidity risk
⢠market risk
⢠currency risk
Risk management framework
Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. Management is responsible for developing and monitoring the Companyâs risk management policies, under the guidance of Audit Committee.
Companyâs risk management policies are established to identify and analyse the risks faced by it, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Companyâs activities. Company, through its training and procedures aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
Companyâs Audit committee oversees how management monitors compliance with the Companyâs risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit committee.
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and mutual funds, foreign exchange transactions and other financial instruments.
Customer credit risk is managed by each business unit subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Trade receivables, which are non-interest bearing, are mainly from stockists, distributors and customers and are generally on 14 days to 270 days credit term excluding wholly owned subsidiaries. Outstanding customer receivables are regularly monitored. The Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically. As at 31 March 2022, the Company had 32 customers, excluding wholly owned subsidiaries (31 March 2021: 26 customers) that owed the company more than '' 0.50 Crore each and accounted for approximately 22% and 29% respectively of the total outstanding as at 31 March 2022 and 31 March 2021.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The company does not hold collateral as security. The company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.
70% of total receivables is from wholly owned subsidiaries.
Sales to certain jurisdictions are either based on advance payments or restricted to certain limits to curtail exposures to credit risk.
Expected credit loss assessment
The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgement.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of impairment of trade receivables do not reflect any significant credit losses. Given that the macroeconomic indicators affecting customers of the Company have not undergone any substantial change, the Company expects the historical trend of minimal credit losses to continue. The trend of the bad debts is negligible.
The impairment loss at 31 March, 2022 related to several customers that have defaulted on their payments to the Company and are not expected to be able to pay their outstanding balances, mainly due to economic circumstances.
(b) Financial instruments
The Company limits its exposure to credit risk by investing in liquid securities issued by mutual funds having a credit ranking of at least 3 and above from CRISIL or equivalent rating agency. Company monitors changes in credit risk by tracking published external credit ranking. Based on its on-going assessment of counterparty risk, the Company adjusts its exposure to various counterparties.
ii. Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Companyâs objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including bilateral loans, debt, and overdraft from banks at an optimised cost. Working capital requirements are adequately addressed by internally generated funds. Trade receivables are kept within manageable levels.
Company aims to maintain the level of its cash and cash equivalents and other highly marketable debt investments at an amount in excess of expected cash outflows on financial liabilities over the next six months. The ratio of cash and cash equivalents and other highly marketable debt investments to outflows is 0.56 at 31 March 2022 (0.51 at 31 March 2021).
Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and equity prices will affect the companyâs income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments.
The Companyâs activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative financial instruments such as foreign exchange contracts to manage its exposures to foreign exchange fluctuations. All such transactions are carried out within the guidelines set by the risk management committee.
iv. Currency risk
The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchases and borrowings are denominated and the functional currency of Company. The currencies in which these transactions are primarily denominated are US dollars and Euro.
At any point in time, Company covers foreign currency risk by taking appropriate percentage of its foreign currency exposure, as approved by risk management committee in line with the laid down policy approved by the Board. Company uses forward exchange contracts to mitigate its currency risk, most with a maturity of less than one year from the reporting date. In respect of other monetary assets and liabilities denominated in foreign currencies, the Companyâs policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.
The operations of the Company are limited to only one segment viz. pharmaceuticals and related products. Revenue from contract with customers is from sale of manufactured goods. Sale of goods are made at a point in time and revenue is recognised upon satisfaction of the performance obligations which is typically upon dispatch / delivery. The Company has a credit evaluation policy based on which the credit limits for the trade receivables are established. There is no significant financing component as the credit period provided by the Company is not significant.
The Company has three ongoing patent litigations as on 31 March 2022. No liability is expected to arise from these litigations.
The Company does not expect the outcome of the matters stated above to have a material adverse impact on the Companyâs financial condition, results of operations or cash flows.
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 (iv) is dependent on decisions by relevant authorities of respective disputes, clause (v) is a financial guarantee.
The new Code on Social Security, 2020 (Code) has been enacted, which could impact the contributions by the Company towards Provident Fund and Gratuity. The effective date from which the changes are applicable is yet to be notified and the rules are yet to be framed. The Company will complete its evaluation and will give appropriate impact in its financial statements in the period in which the Code becomes effective and the related rules are published.
During the year, the Honâble ITAT has issued an order in favour of the Company with respect to disputed matters under the Income Tax Act, 1961 for certain prior years. The order giving effect and the consequent refund of taxes paid was accordingly received by the Company during the year and has been recorded as income tax credit for prior years. Considering that as on date, there are no pending litigations with respect to these matters for the said assessment years, no further liabilities have been ascertained in this respect.
Based on the internal and external transfer pricing review and validation, the Company believes that all transactions with associated enterprises are undertaken on the basis of armâs length principle. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. Details related to Corporate Guarantee and ESOP given to Employees of Subsidiary provided in note 52 and 46 respectively.
The Board of Directors have taken the decision to wind up its step-down subsidiary company, Ajanta Pharma (Mauritius) International Limited (wholly owned subsidiary of Ajanta Pharma (Mauritius) Limited). The Company has obtained the no objection clearance from the Mauritius Revenue Authority for its removal from the Register of the Corporate and Business Registration Department.
Efl CONTRIBUTION TOWARDS CORPORATE SOCIAL RESPONSIBILITY ("CSR"):
As per section 135 of the Act, a CSR committee has been formed by the Company. The funds are utilised during the year on the activities which are specified in schedule VII of the Act. The utilisation is done by way of direct and indirect contribution towards various activities.
55. The Company has presented data relating to its segments based on its consolidated financial statements, which are presented in the same Annual Report. Accordingly, in terms of paragraph 4 of the Indian Accounting Standard (Ind AS 108) "Operating Segments", no disclosures related to segments are presented in this standalone financial statements.
I6il UTiLiSATiON OF BORROWED FUNDS AND SHARE PREMiUM
A. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
B. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) 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
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
The charge relating to temporary differences during the year ended 31 March 2022 are primarily on account of property plant and equipment and gain on investment at FVTPL partially offset by provision for expired goods, provision for loss allowance, compensated absences. The credit to temporary differences during the year ended 31 March 2021 are primarily on account of property plant and equipment and gain on investment at FVTPL partially offset by provision for expired goods, provision for loss allowance, compensated absences. Current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same authority.
1351 IMPACT OF COVID - 19 (GLOBAL PANDEMIC)
The Company has taken into account all the possible impacts of COVID-19 in preparation of these standalone financial statements, including but not limited to its assessment of, liquidity and going concern assumption, recoverable values of its financial and non-financial assets, impact on revenue recognition and impact on leases. The Company has carried out this assessment based on available internal and external sources of information up to the date of approval of these standalone financial statements and believes that the impact of COVID-19 is not material to these financial statements and expects to recover the carrying amount of its assets.
The impact of COVID-19 on the standalone financial statements may differ from that estimated as at the date of approval of these standalone financial statements owing to the nature and duration of COVID-19.
66. Previous year figures have been regrouped / re-classified wherever necessary, to confirm to current periodâs classification in order to comply with the requirements of the amended Schedule III to the Companies Act, 2013 effective from 1 April 2021.
Mar 31, 2019
1. Corporate Information
Ajanta Pharma Limited ("Company") is a public limited company incorporated and domiciled in India. Its shares are listed on Bombay Stock Exchanges and National Stock Exchange. The Registered office of Company is located at Ajanta House, Charkop, Kandivali (West), Mumbai.
Company is primarily involved in development, manufacturing and marketing of speciality pharmaceutical finished dosages.
The financial statements for the Company were authorised for issue by Company''s Board of Directors on 30th April 2019.
2. Basis of Preparation
These standalone financial statements of the Company have been prepared in all material aspects in accordance with the recognition and measurement principles laid down in Indian Accounting Standards (hereinafter referred to as the ''Ind AS'') as notified under section 133 of the Companies Act, 2013 (''The Act'') read with Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act and accounting principles generally accepted in India.
These standalone financial statements have been prepared on an accrual basis and under the historical cost basis, except otherwise stated.
3. Functional and Presentation Currency
The financial statements are presented in Indian Rupees (''INR'' or ''Rupees'' or ''Rs.'' or ''?'') which is the functional currency for the Company.
4. Rounding of Amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest crore.
5. Current versus non-current classification
The assets and liabilities in the balance sheet are presented based on current/non-current classification.
An asset is current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle, or
- Held primarily for the purpose of trading, or
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when it is:
- Expected to be settled in normal operating cycle, or
- Held primarily for the purpose of trading, or
- Due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are treated as non-current.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities respectively.
Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
There are no other trade receivables which have significant increase in credit risk, Refer note 43 B for information about credit risk and market risk of trade receivables
Trade receivables includes debts due from subsidiary companies (Current Year Rs. 245.78 crore, Previous Year Rs. 201.41 crore) Refer note 49
6.1. Rights attached to equity shares
The Company has only one class of equity shares with voting rights having a par value of Rs. 2 per share. The Company declares and pays dividends in Indian Rupees. Any interim dividend paid is recognised on the approval by Board of Directors.
During the year ended 31st March 2019, the amount of dividend per equity share recognised as distribution to equity shareholders is Rs. 9 (Previous Year Rs.Nil), which includes interim dividend of Rs. 9 (Previous Year Rs. Nil) per equity share.
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.
6.2. Equity shares extinguished on buyback
The Board of Directors of the Company, at its meeting held on 30th January 2019 had approved a proposal to buyback upto 7,69,230 equity shares of the Company for an aggregate amount not exceeding Rs. 100 crore being 0.87% of the total paid up equity share capital at Rs. 1,300 per equity share. A Letter of Offer was made to all eligible shareholders. The Company bought back 769,230 equity shares out of the shares that were tendered by eligible shareholders and extinguished the equity shares bought back on 26th March 2019. The Company has utilised its Securities Premium (Rs. 78.62 crore) and General Reserve (Rs. 21.23 crore) for the buyback of its equity shares. Total transaction cost of Rs. 0.99 crore incurred towards buyback was offset from retained earnings. In accordance with Section 69 of the Companies Act 2013, the Company has created Capital Redemption Reserve of Rs. 0.15 crore equal to the nominal value of the shares bought back as an appropriation from the General Reserve.
7. Capital Management:
Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return (EBIT) on capital, as well as the level of dividends to equity shareholders. Company''s target is to achieve a return on capital above 30%; in 2018-19 the return was 24% and in 2017-18 the return was 29%.
8. Employee Benefits
As required by Ind AS 19 ''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 administered 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.
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:
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 with a maximum limit of Rs. 0.20 crore.
On the death in service:
As per the provisions of Payment of Gratuity Act, 1972 without any vesting period.
The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at 31st March 2019. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognised in the Company''s financial statements as at the Balance Sheet date:
Sensitivity Analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.
Although the analysis does not take into account full distribution of cash flows expected under the plan, it does provide an approximation of sensitivity of assumptions. 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.
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. 15.52 crore (Pr. Yr. Rs. 12.94 crore) being liability as at the year-end for compensated absences as per actuarial valuation has been provided in the accounts.
10. Share based payments
Company has established "Employees Stock Options Scheme 2011" (''ESOS - 2011'') as approved in earlier year by the shareholders of the Company and Compensation committee of Board of Directors for key Employees of the Company. The options issued under the above scheme vest in a phased manner.
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.
Valuation of stock options
The fair value of stock options granted during the period has been measured using the Black-Scholes option pricing model at the date of the grant. The Black-Scholes option pricing model includes assumptions regarding dividend yields, expected volatility, expected terms and risk free interest rates. They key inputs and assumptions used are as follows:
Share price: The closing price on NSE as on the date of grant has been considered for valuing the options granted.
Exercise Price: Exercise Price is the market price or face value or such other price as determined by the Remuneration and Compensation Committee.
Expected Volatility: The historical volatility of the stock till the date of grant has been considered to calculate the fair value of the options.
Expected Option Life: Expected Life of option is the period for which the Company expects the options to be live. The minimum life of a stock option is the minimum period before which the options cannot be exercised and the maximum life is the period after which the options cannot be exercised.
Expected dividends: Expected dividend yield has been calculated as an average of dividend yields for four years preceding the date of the grant.
Risk free interest rate: The risk free interest rate on the date of grant considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero coupon yield curve for Government Securities.
These assumptions reflect management''s best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside of the Company''s control. As a result, if other assumptions had been used in the current period, stock-based compensation expense could have been materially impacted. Further, if management uses different assumptions in future periods, stock based compensation expense could be materially impacted in future years. The estimated fair value of stock options is charged to income on a straight-line basis over the requisite service period of each separately vesting portion of the award as if the award was, in-substance, multiple awards.
Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes mutual funds that have declared buyback NAV. The mutual funds are valued using the closing NAV.
Level 2: The fair value of financial instruments that are not traded in an active market (like Mark to Market Derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value as instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
B. Financial risk management
Company has exposure to following risks arising from financial instruments:
- credit risk
- liquidity risk
- market risk
- currency risk
Risk management framework
Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. Management is responsible for developing and monitoring the Company''s risk management policies, under the guidance of Audit Committee.
Company''s risk management policies are established to identify and analyse the risks faced by it, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities. Company, through its training and procedures aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
Company''s Audit committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit committee.
i. Credit risk
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and mutual funds, foreign exchange transactions and other financial instruments.
(a) Trade receivables
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Trade receivables, which are non interest bearing, are mainly from stockists, distributors and customers and are generally on 14 days to 150 days credit term excluding wholly owned subsidiaries. Outstanding customer receivables are regularly monitored. The Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically.
As at 31st March 2019, Company had 25 customers, excluding wholly owned subsidiaries (31st March 2018: 36 customers) that owed the company more than Rs. 0.50 crore each and accounted for approximately 29% and 40% of the total outstanding as at 31st March 2019 and 31st March 2018.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The company does not hold collateral as security. The company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.
58% of total receivables is from wholly owned subsidiaries. These subsidiaries also have credit policies that are in line with the holding company.
Sales to certain jurisdictions are either based on advance payments or restricted to certain limits to curtail exposures to credit risk.
Expected credit loss assessment
The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgement.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of impairment of trade receivables do not reflect any significant credit losses. Given that the macroeconomic indicators affecting customers of the Company have not undergone any substantial change, the Company expects the historical trend of minimal credit losses to continue.
The impairment loss at 31st March 2019 related to several customers that have defaulted on their payments to the Company and are not expected to be able to pay their outstanding balances, mainly due to economic circumstances.
(b) Financial instruments
Company limits its exposure to credit risk by investing in liquid securities issued by mutual funds having a credit ranking of at least 3 and above from CRISIL or equivalent rating agency. Company monitors changes in credit risk by tracking published external credit ranking. Based on its on-going assessment of counterparty risk, the Company adjusts its exposure to various counterparties.
ii. Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company''s objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including bilateral loans, debt, and overdraft from banks at an optimised cost. Working capital requirements are adequately addressed by internally generated funds. Trade receivables are kept within manageable levels.
Company aims to maintain the level of its cash and cash equivalents and other highly marketable debt investments at an amount in excess of expected cash outflows on financial liabilities over the next six months. The ratio of cash and cash equivalents and other highly marketable debt investments to outflows is 0.31 at 31st March 2019 (31st March 2018: 0.73).
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.
iii. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments.
The Company''s activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative financial instruments such as foreign exchange contracts to manage its exposures to foreign exchange fluctuations. All such transactions are carried out within the guidelines set by the risk management committee.
iv. Currency risk
Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchases and borrowings are denominated and the functional currency of Company. The currencies in which these transactions are primarily denominated are US dollars and Euro.
At any point in time, Company covers foreign currency risk by taking appropriate percentage of its foreign currency exposure, as approved by risk management committee in line with the laid down policy approved by the Board. Company uses forward exchange contracts to mitigate its currency risk, most with a maturity of less than one year from the reporting date. In respect of other monetary assets and liabilities denominated in foreign currencies, the Company''s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.
For the year ended 31st March 2019 every percentage point depreciation / appreciation in the exchange rate for the closing balances between the Indian Rupee and respective currencies would affect the Company''s incremental profit before tax as per below:
11. Note on foreign currency exposures on assets and liabilities:
Disclosure on foreign currency forward contracts
During the year, the Company has entered into forward exchange contract, being derivative instruments to mitigate foreign currency risk, to establish the amount of currency in Indian Rupees required or available at the settlement date of certain payables and receivables.
12. Note on foreign currency exposures on assets and liabilities:
Disclosure on foreign currency exposures on assets and liabilities
13. Disaggregation of revenue
The operations of the Company are limited to only one segment viz. pharmaceuticals and related products. Revenue from contract with customers is from sale of manufactured goods and rendering of research services. Sale of goods are made at a point in time and revenue is recognised upon satisfaction of the performance obligations which is typically upon dispatch / delivery. The Company has a credit evaluation policy based on which the credit limits for the trade receivables are established. There is no significant financing component as the credit period provided by the Company is not significant.
13.1. Provision of anticipated Return of Expired Goods subsequent to Sale:
Provision has been made towards probable return of goods from customers, as per Indian Accounting Standard (Ind AS) 37 estimated by management based on past trends.
The company normally sells goods on credit which varies from 30 to 240 days in case of export sales. This does not involve any significant financing element.
The company receives payments from customers based on payment terms, as established in each contract. The contract asset relates to cost incurred to perform in advance of scheduled billing. The contract liability relates to payments received in advance of performance under the contract. Changes in the contract asset and liability are due to performance under the contract.
More than 10% of Company''s Revenue is from only one Customer based at USA for Rs. 250.27 crore.
14. Disclosure for operating leases under Ind AS 17 Leases":
Company has taken various premises under operating lease. These are generally cancellable and ranges from 11 months to 5 years and are renewable by mutual consent on mutually agreeable terms. Some of these lease agreements have price escalation clauses. There are no restrictions imposed by these lease arrangements and there are no sub leases. There are no contingent rents. The lease payments of Rs. 15.75 crore (Pr. Yr. Rs. 10.84 crore) are recognised in the Statement of Profit and Loss under "Rent" under Note 38.
The Company does not expect the outcome of the matters stated above to have a material adverse impact on the Company''s financial condition, results of operations or cash flows.
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, clause (vi) is a financial guarantee and in respect of clause (vii) Subsidiary is dissolved.
Supreme Court Judgement on computation of provident fund contribution
The Hon''ble Supreme Court of India ("SC") by their order dated 28th February 2019, in the case of Surya Roshani Limited & others v/s EPFO, set out the principles based on which allowances paid to the employees should be identified for inclusion in basic wages for the purposes of computation of provident Fund contribution. Subsequently, a review petition against this decision has been filed and is pending before the SC for disposal.
In view of the management, the liability for the period from date of the SC order to 31st March 2019 is not significant. Further, pending decision on the subject review petition and directions from the EPFO, the impact for the past period, if any, is not ascertainable and consequently no effect has been given in the accounts.
Commitments
a) Estimated amounts of contracts remaining to be executed on capital account and not provided for, net of advances Rs. 260.18 crore ( Pr. Yr. Rs. 161.88 crore).
b) Other Commitments - Non-cancellable operating leases (Refer note 47).
15. Contribution towards Corporate Social Responsibility:
The particulars of CSR expenditure are as follows:
a) Gross amount required to be spent by the Company during the year is Rs. 11.27 crore (Previous year: Rs. 10.60)
b) Amount spend during the year on:
16. The Company has presented data relating to its segments based on its consolidated financial statements, which are presented in the same Annual Report. Accordingly, in terms of paragraph 4 of the Indian Accounting Standard (Ind AS 108) "Operating Segments", no disclosures related to segments are presented in this standalone financial statements.
17. Details Of Dues To Micro And Small Enterprises As Defined Under The Micro, Small And Medium Enterprises Development Act, 2006:
This information has been determined to the extent such parties have been identified on the basis of information available with the Company.
18. The Company had entered into a Joint Venture (''JV'') with JV Turkmenderman Ajanta Pharma Ltd. (TDAPL) where it had management control during the first 10 years of this contractual arrangement. However in terms of the JV agreement, the Company subsequently surrendered the management control in favour of the local partner and since then ceased to have any control on the operations of the JV. Further, TDAPL operates under severe restrictions that significantly impairs its ability to transfer the funds. Consequently, the Company had impaired it''s entire investment in TDAPL and considers this as an unrelated party. The Company is also unable to obtain reliable and accurate financial information in respect of the said JV.
19. Pre-operative expenses capitalised during the year represent direct attributable expenditure for setting up of plants prior to the date of commencement of commercial production. The same were capitalised on completion of projects and commencement of commercial operations. The details of pre-operative expenses capitalised are:
The charge relating to temporary differences during the year ended 31st March 2019 are primarily on account of property plant and equipment and gain on investment at FVTPL partially offset by provision for expired goods, provision for loss allowance, compensated absences, MAT credit entitlement. The credit to temporary differences during the year ended 31st March 2018 are primarily on account of Property plant and equipment and gain on investment at FVTPL partially offset by provision for expired goods, compensated absences, provision for loss allowance.
20. Previous year''s figures have been regrouped / reclassified wherever necessary, to conform to current year''s classification.
Mar 31, 2018
1. Capital Management:
Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital, as well as the level of dividends to equity shareholders. The board of directors seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowing and the advantages and security afforded by a sound capital position. Company''s target is to achieve a return on capital above 30%; in 2017-18 the return was 29% and in 2016-17 the return was 43%.
Company monitors capital using a ratio of ''adjusted net debt'' to ''adjusted equity''. For this purpose, adjusted net debt is defined as total liabilities, comprising interest-bearing loans and borrowings and obligations under finance leases, less cash and cash equivalents and current investments. Adjusted equity comprises all components of equity.
* On account of Employee Stock Option Scheme (ESOS)-(Refer note 43).
2. Employee Benefits
As required by Ind AS 19 ''Employee Benefits'' the disclosures are as under:
3. 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 administered 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 made the following contributions:
4. Defined Contribution 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. 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 with a maximum limit of Rs, 0.20 crores.
6. On the death in service:
As per the provisions of Payment of Gratuity Act, 1972 without any vesting period.
Disclosures for defined benefit plans i.e. Gratuity (Funded Plan), based on actuarial reports as on 31st March 2018. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognized in the Company''s financial statements as at the Balance Sheet date:
Although the analysis does not take into account full distribution of cash flows expected under the plan, it does provide an approximation of sensitivity of assumptions. 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.
The expected contributions for Defined Benefit Plan for the next financial year will be in line with FY 2017-18.
7. 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,12.94 cr. (Pr. Yr. Rs, 3.87 cr.) being liability as at the year-end for compensated absences as per actuarial _ valuation has been provided in the accounts.
8 Share based payments
Company has established "Employees Stock Options Scheme 2011" (''ESOS - 2011'') as approved in earlier year by the shareholders of the Company and Compensation committee of Board of Directors for key Employees of the Company. The options issued under the above scheme vest in a phased manner.
During the year 2000 options have been granted by the Company under the aforesaid ESOS - 2011 to the employees of the Company.
Share price: The closing price on NSE as on the date of grant has been considered for Valuing the options granted.
Exercise Price: Exercise Price is the market price or face value or such other price as determined by the Remuneration and Compensation Committee.
Expected Volatility: The historical volatility of the stock till the date of grant has been considered to calculate the fair value of the options.
Expected Option Life: Expected Life of option is the period for which the Company expects the options to be live. The minimum life of a stock option is the minimum period before which the options cannot be exercised and the maximum life is the period after which the options cannot be exercised.
Expected dividends: Expected dividend yield has been calculated as an average of dividend yields for four years preceding the date of the grant.
Risk free interest rate: The risk free interest rate on the date of grant considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero coupon yield curve for Government Securities.
These assumptions reflect management''s best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside of the Company''s control. As a result, if other assumptions had been used in the current period, stock-based compensation expense could have been materially impacted. Further, if management uses different assumptions in future periods, stock based compensation expense could be materially impacted in future years. The estimated fair value of stock options is charged to income on a straight-line basis over the requisite service period of each separately vesting portion of the award as if the award was, in-substance, multiple awards.
Fair value hierarchy
This section explains the judgments and estimates made in determining the fair values of the financial instruments that are (a) recognized and measured at fair value and (b) measured at amortized cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes mutual funds that have quoted price. The mutual funds are valued using the closing NAV.
Level 2: The fair value of financial instruments that are not traded in an active market (like Mark to Market Derivative Asset) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value as instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities etc. included in level 3.
Measurement of fair values:
Valuation techniques and significant unobservable inputs:
The following tables show the valuation techniques used in measuring Level 2 fair values, for financial instruments measured at fair value in the statement of financial position, as well as the significant unobservable inputs used:
B. Financial risk management
Company has exposure to following risks arising from financial instruments:
- credit risk
- liquidity risk
- market risk
Risk management framework
Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. Management is responsible for developing and monitoring the Company''s risk management policies, under the guidance of Audit Committee.
Company''s risk management policies are established to identify and analyse the risks faced by it, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities. Company, through its training and procedures aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
Company''s Audit committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit committee.
i. Credit risk
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and mutual funds, foreign exchange transactions and other financial instruments.
(a) Trade receivables
Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Trade receivables, which are non-interest bearing, are mainly from stockists, distributors and customers and are generally on 14 days to 150 days credit term. Credit limits are established for all customers based on internal rating criteria and any deviation in credit limit require approval of Directors. More than 90% of customers have been transacting with company for over 4 years and all of them are being monitored by individual business managers located in those countries/places. Outstanding customer receivables are regularly monitored. The Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically.
As at 31st March 2018, Company had 36 customers, excluding wholly owned subsidiaries (31st March 2017: 42 customers) that owed the company more than '' 0.50 crore each and accounted for approximately 50% of the total outstanding as at 31st March 2018 and 31st March 2017.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The company does not hold collateral as security. The company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.
43% of total receivables is from wholly owned subsidiaries. These subsidiaries also have credit policies that are in line with the holding company.
Sales to certain jurisdictions are either based on advance payments or restricted to certain limits to curtail exposures to credit risk.
Expected credit loss assessment
The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgment.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of impairment of trade receivables do not reflect any significant credit losses. Given that the macroeconomic indicators affecting customers of the Company have not undergone any substantial change, the Company expets the historical trend of minimal credit losses to continue.
The impairment loss at 31st March 2018 related to several customers that have defaulted on their payments to the Company and are not expected to be able to pay their outstanding balances, mainly due to economic circumstances.
(b) Financial instruments
Company limits its exposure to credit risk by investing only in liquid debt securities issued by mutual funds having a credit ranking of at least 3 and above from CRISIL or equivalent rating agency. Company monitors changes in credit risk by tracking published external credit ranking. Based on its on-going assessment of counterparty risk, the Company adjusts its exposure to various counterparties.
ii. Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company''s objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including bilateral loans, debt, and overdraft from banks at an optimized cost. Working capital requirements are adequately addressed by internally generated funds. Trade receivables are kept within manageable levels.
Company aims to maintain the level of its cash and cash equivalents and other highly marketable debt investments at an amount in excess of expected cash outflows on financial liabilities over the next six months. The ratio of cash and cash equivalents and other highly marketable debt investments to outflows is 0.70 at 31st March 2018 (31st March 2017: 0.92).
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.
iii. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments.
The Company''s activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative financial instruments such as foreign exchange contracts to manage its exposures to foreign exchange fluctuations. All such transactions are carried out within the guidelines set by the risk management committee.
The sensitivity analysis have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant.
The analysis excludes the impact of movements in market variables on the carrying value of postemployment benefit obligations, provisions and on the non-financial assets and liabilities.
The sensitivity of the relevant income statement item is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities held as of 31st March 2018 and 31st March 2017.
(a) Currency risk
Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchases and borrowings are denominated and the functional currency of Company. The currencies in which these transactions are primarily denominated are US dollars and Euro.
At any point in time, Company covers foreign currency risk by taking appropriate percentage of its foreign currency exposure, as approved by risk management committee in line with the laid down policy approved by the Board. Company uses forward exchange contracts to mitigate its currency risk, most with a maturity of less than one year from the reporting date. In respect of other monetary assets and liabilities denominated in foreign currencies, the Company''s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.
45. Note on foreign currency exposures on assets and liabilities:
(a) Disclosure on foreign currency on assets and liabilities
During the year, the Company has entered into Forward Exchange Contract, being derivative instruments to mitigate foreign currency risk, 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:
(b) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt interest obligations. Further, the Company engages in financing activities at market linked rates, any changes in the interest rates environment may impact future rates of borrowing.
(c) Price risk
Company does not have any exposure to price risk, as there is no equity investments by company except in its own subsidiaries.
9. Disclosure for operating leases under Ind AS 17 - " Leases":
Company has taken various premises under operating lease. These are generally cancellable and ranges from 11 months to 5 years and are renewable by mutual consent on mutually agreeable terms. Some of these lease agreements have price escalation clauses. There are no restrictions imposed by these lease arrangements and there are no sub leases. There are no contingent rents. The lease payments of Rs, 10.84 cr. (Pr. Yr. Rs, 6.31 cr.) are recognized in the Statement of Profit and Loss under "Rent" under Note 39.
The Company does not except the outcome of the matters stated above to have a material adverse impact on the Company''s financial condition, results of operations or cash flow.
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.
Commitments
a) Estimated amounts of contracts remaining to be executed on capital account and not provided for, net of advances Rs, 161.88 cr. ( Pr. Yr. Rs, 132.28 cr.).
b) Other Commitments - Non-cancellable operating leases (Refer note 46).
10. Related party disclosure as required by Ind AS 24 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 (APUK)
Category II- Directors, Key Management Personnel & their Relatives:
Mr. Mannalal B. Agrawal Chairman
Mr. Purushottam B. Agrawal Non-Executive Director
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 Officer
Mr. Gaurang Shah Company Secretary
Mr. Chandrakant M. Khetan Independent Director
Dr. Anil Kumar Independent Director
Mr. K. H. Viswanathan Independent Director
Mr. Prabhakar Dalal Independent Director
Dr. Anjana Grewal Independent Director
& Relatives of Key Management Personnel
Category III-Enterprise over which persons covered under Category II above are able to exercise significant control:
Gabs Investments Private Limited
Seth Bhagwandas Agrawal Charitable Trust
Ganga Exports being represented by Mr. Yogesh Agrawal,
Mr. Rajesh Agrawal, Mr. Ravi Agrawal & Mr. Aayush Agrawal Mannalal Agrawal Trust, Trustee - Mannalal Agrawal Yogesh Agrawal Trust, Trustee - Yogesh M Agrawal Rajesh Agrawal Trust, Trustee - Rajesh M Agrawal Ravi Agrawal Trust, Trustee - Ravi P Agrawal Aayush Agrawal Trust, Trustee - Aayush Agrawal Ajanta Pharma Limited Group Gratuity Trust Samta Purushottam Agrawal Memorial Foundation Ajanta Foundation (w.e.f 20th September 2017)
The Company has completed an independent evaluation for all international and domestic transactions for the year ended 31st March 2018 and has reviewed the same for the year ended 31st March 2017 to determine whether the transactions with associated enterprises are undertaken at arm''s length price. Based on the internal and external transfer pricing review and validation, the Company believes that all transactions with associated enterprises are undertaken on the basis of arm''s length principle.
11. Contribution towards Corporate Social Responsibility:
The particulars of CSR expenditure are as follows:
a) Gross amount required to be spent by the company during the year is Rs, 10.60 cr. (Previous year: Rs, 8.45)
b) Amount spend during the year on:
50. Provision of anticipated Sales Return for Expired Goods
As per best estimate of management, provision has been made towards probable return of goods from customers, as per Indian Accounting Standard (Ind AS) 37.
12. The Company has presented data relating to its segments based on its consolidated financial statements, which are presented in the same Annual Report. Accordingly, in terms of paragraph 4 of the Indian Accounting Standard (Ind AS 108) "Operating Segments", no disclosures related to segments are presented in this standalone financial statements.
13. Company had entered into a Joint Venture with JV Turkmenderman Ajanta Pharma Ltd. (TDAPL) about two decade back, where it had management control. However in terms of JV agreement, Company subsequently surrendered management control in favour of local partner and since then do not have any control on the same. Further TDAPL operates under severe restriction that significantly impairs its ability to transfer the funds. Hence, company impaired entire investment in TDAPL and considered as unrelated party. The Company is also unable to obtain reliable & acculate financial information in respect of the said JV.
14. Pre-operative expenses capitalised during the year represent direct attributable expenditure for setting up of plants prior to the date of commencement of commercial production. The same were capitalised on completion of projects and commencement of commercial operations. The details of pre-operative expenses capitalised are:
The charge relating to temporary differences during the year ended 31st March 2018 are primarily on account of property plant and equipment and gain on investment at FVTPL partially offset by provision for expired goods, provision for loss allowance, compensated absences, MAT credit entitlement. The credit to temporary differences during the year ended 31st March 2017 are primarily on account of Property plant and equipment and gain on investment at FVTPL partially offset by provision for expired goods, compensated absences, provision for loss allowance, forward contract receivable.
15. Previous year''s figures have been regrouped / reclassified wherever necessary, to conform to current year''s classification. Previous year standalone financial statements have been audited by firm of Chartered Accountants other than B S R & Co. LLP.
Mar 31, 2017
1. Critical accounting judgments, estimates and assumptions
The preparation of Company''s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the assets or liabilities in future periods.
(a) Arrangement containing lease
At the inception of an arrangement, Company determines whether the arrangement is or contains a lease. At the inception or on reassessment of an arrangement that contains a lease, Company separates payments and other consideration required by the arrangement into those for the lease and those for the other elements on the basis of their relative fair values.
Company has determined, based on an evaluation of the terms and conditions of the arrangements that such contracts are in the nature of operating leases.
(b) Multiple element contracts with vendors
Company has entered into multiple element contracts with vendors for supply of goods and rendering of services. The consideration paid is/may be determined independent of the value of supplies received and services availed. Accordingly, the supplies and services are accounted for based on their relative fair values to the overall consideration. The supplies with finite life under the contracts (as defined in the significant accounting policies) have been accounted under Property, Plant and Equipment and/or as Intangible assets, since Company has economic ownership in these assets. Company believes that the current treatment represents the substance of the arrangement.
(c) Property, Plant and equipment
Determination of the estimated useful life of tangible assets and the assessment as to which components of the cost may be capitalized. Useful life of tangible assets is based on the life prescribed in Schedule II of the Companies Act, 2013. Assumptions also need to be made, when Company assesses, whether an asset may be capitalized and which components of the cost of the asset may be capitalized.
(d) Intangible Assets
Internal technical or user team assess the remaining useful lives of Intangible assets. Management believes that assigned useful lives are reasonable.
(e) Recognition and measurement of defined benefit obligations:
The obligation arising from the defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation and vested future benefits and life expectancy. The discount rate is determined with reference to market yields at the end of the reporting period on the government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the post-employment benefit obligations.
(f) Recognition of deferred tax assets and income tax:
Deferred tax asset is recognized for all the deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized. The management assumes that taxable profits will be available while recognizing deferred tax assets.
Management judgment is required for the calculation of provision for income taxes and deferred tax assets and liabilities. Company reviews at each balance sheet date the carrying amount of deferred tax assets. The factors used in estimates may differ from actual outcome which could lead to significant adjustment to the amounts reported in the standalone financial statements.
(g) Recognition and measurement of other provisions:
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the balance sheet date. The actual outflow of resources at a future date may, therefore, vary from the figure included in other provisions.
(h) Contingencies
Management judgment is required for estimating the possible outflow of resources, if any, in respect of contingencies/claim/litigations against Company as it is not possible to predict the outcome of pending matters with accuracy.
(i) Allowance for uncollected accounts receivable and advances
Trade receivables do not carry any interest and are stated at their normal value as reduced by appropriate allowances for estimated irrecoverable amounts. Individual trade receivables are written off when management deems them not collectible. Impairment is made on the expected credit losses, which are the present value of the cash shortfall over the expected life of the financial assets.
The impairment provisions for financial assets are based on assumption about risk of default and expected loss rates. Judgment in making these assumption and selecting the inputs to the impairment calculation are based on past history, existing market condition as well as forward looking estimates at the end of each reporting period.
(j) Insurance claims
Insurance claims are recognized when Company have reasonable certainty of recovery.
(k) Impairment reviews
An impairment exists when the carrying value of an asset or cash generating unit (âCGU'') exceeds its recoverable amount. Recoverable amount is the higher of its fair value less costs to sell and its value in use. The value in use calculation is based on a discounted cash flow model. In calculating the value in use, certain assumptions are required to be made in respect of highly uncertain matters, including management''s expectations of growth in EBITDA, long term growth rates; and the selection of discount rates to reflect the risks involved.
During the year ended 31st March 2017, the amount of dividend per equity share recognized as distribution to equity shareholders is '' 13 (Pr. Yr. Rs, 14), which includes interim dividend of Rs, 13 (Pr. Yr. Rs, 8) per equity share.
In the event of liquidation of 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. Capital Management:
Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital, as well as the level of dividends to equity shareholders. The board of directors seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowing and the advantages and security afforded by a sound capital position. Company''s target is to achieve a return on capital above 35%; in 2016-17 the return was 43% and in 2015-16 the return was 47%.
Company monitors capital using a ratio of âadjusted net debt'' to âadjusted equity''. For this purpose, adjusted net debt is defined as total liabilities, comprising interest-bearing loans and borrowings and obligations under finance leases, less cash and cash equivalents and current investments. Adjusted equity comprises all components of equity.
3. Employee Benefits
As required by Ind AS 19 âEmployee Benefits'' the disclosures are as under:
4. Defined Contribution Plans
Company offers its employees defined contribution plans in the form of Provident Fund (PF) and Employeesâ 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 Company pay predetermined contributions into the Provident Fund and the ESI Scheme, contributions into the Pension fund is made only by Company. The contributions are normally based on a certain proportion of the employee''s salary. During the year, Company has recognized the following amounts in the Account:
Defined Benefit Plans
Gratuity: 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. 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. On the death in service:
As per the provisions of Payment of Gratuity Act, 1972 without any vesting period.
Death Benefit: 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 sand plan. The death benefit plan is non-funded.
Although the analysis does not take into account full distribution of cash flows expected under the plan, it does provide an approximation of sensitivity of assumptions. 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.
The expected contributions for Defined Benefit Plan for the next financial year will be in line with FY 2016-17. 42.3 Leave Encashment:
Company''s employees are entitled for compensated absences which are allowed to be accumulated and encased as per Company''s rule. The liability of compensated absences, which is non-funded, has been provided based on report of independent actuary using âProjected Unit Credit Methodâ.
Accordingly Rs, 3.87 cr. (Pr. Yr. Rs, 3.29 cr.) being liability as at the year-end for compensated absences as per actuarial valuation has been provided in the accounts.
7. Share based payments
Company has implemented âEmployees Stock Options Scheme 2011â (Rs,ESOS - 2011'') as approved in earlier year by the shareholders of Company and Compensation committee of Board of Directors.
During the year 15,500 options have been granted by Company under the aforesaid ESOS - 2011 to the employees of 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 '' 2/- each.
Fair value hierarchy
This section explains the judgments and estimates made in determining the fair values of the financial instruments that are (a) recognized and measured at fair value and (b) measured at mortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes mutual funds that have quoted price. The mutual funds are valued using the closing NAV.
Level 2: The fair value of financial instruments that are not traded in an active market (like forward contracts) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value as instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities etc. included in level 3.
B. Financial risk management
Company has exposure to following risks arising from financial instruments:
- credit risk
- liquidity risk
- market risk
i. Risk management framework
Company''s board of directors has overall responsibility for the establishment and oversight of Company''s risk management framework. Management is responsible for developing and monitoring Company''s risk management policies, under the guidance of Audit Committee.
Company''s risk management policies are established to identify and analyze the risks faced by it, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and Company''s activities. Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations
Company''s Audit committee oversees how management monitors compliance with Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by Company. The Audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit committee.
ii. Credit risk
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, mutual funds and financial institutions, foreign exchange transactions and other financial instruments.
(a) Trade receivables
Customer credit risk is managed by each business unit subject to Company''s established policy, procedures and control relating to customer credit risk management. Trade receivables are mainly from wholesalers, non-interest bearing and are generally on 14 days to 150 days credit term. Credit limits are established for all customers based on internal rating criteria and any deviation in credit limit require approval of Directors. More than 90% of customers have been transacting with company for over 4 years and all of them are being monitored by individual business managers located in those countries/ places. Outstanding customer receivables are regularly monitored. Company has no concentration of credit risk as the customer base is widely distributed both economically and geographically.
As at 31st March 2017, Company had 42 customers, excluding own subsidiaries (31st March 2016: 55 customers, 1st April 2015: 45 customers) that owed the company more than Rs, 0.50 cr. each and accounted for approximately 50% for all 3 years i.e. 31st March 2017, 31st March 2016 and 1st April 2015 of all the receivables outstanding.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on exchange losses historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The company does not hold collateral as security. The company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.
(b) Financial instruments
Company limits its exposure to credit risk by investing only in liquid debt securities issued by mutual funds and only that have a credit ranking of at least 3 and above from CRISIL or equivalent rating agency. Company monitors changes in credit risk by tracking published external credit ranking. Based on its on-going assessment of counterparty risk, Company adjusts its exposure to various counterparties.
iii. Liquidity risk
Liquidity risk is the risk that Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. Company''s objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including bilateral loans, debt, and overdraft from banks at an optimized cost. Working capital requirements are adequately addressed by internally generated funds. Trade receivables are kept within manageable levels.
Company aims to maintain the level of its cash and cash equivalents and other highly marketable debt investments at an amount in excess of expected cash outflows on financial liabilities over the next six months. The ratio of cash and cash equivalents and other highly marketable debt investments to outflows is 0.96 at 31st March 2017 (31st March 2016: 0.37; 1st April 2015: 0.14).
iv. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments.
Company''s activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rates. Company uses derivative financial instruments such as foreign exchange contracts to manage its exposures to foreign exchange fluctuations. All such transactions are carried out within the guidelines set by the risk management committee.
The sensitivity analysis have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant.
The analysis excludes the impact of movements in market variables on the carrying value of postemployment benefit obligations, provisions and on the non-financial assets and liabilities.
The sensitivity of the relevant income statement item is the effect of the assumed changes in the respective market risks. This is based on the financial assets and financial liabilities held as of 31st March 2017 and 31st March 2016.
(a) Currency risk
The Group is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchases and borrowings are denominated and the respective functional currencies of Company.
The currencies in which these transactions are primarily denominated are US dollars and Euro.
At any point in time, Company covers foreign currency risk by taking appropriate percentage of its foreign currency exposure, as approved by risk management committee in line with the laid down policy approved by the Board. Company uses forward exchange contracts to mitigate its currency risk, most with a maturity of less than one year from the reporting date. In respect of other monetary assets and liabilities denominated in foreign currencies, Company''s policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.
A reasonably possible change of 100 basis points in interest rates at the reporting date would have impacted profit before tax as per below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.
(c) Price risk
Company does not have any exposure to price risk, as there is no equity investments by company except in its own subsidiaries.
8. Disclosure for operating leases under Ind AS 17 Leasesâ:
Company has taken various premises under operating lease. These are generally cancellable and ranges from 11 months to 5 years and are renewable by mutual consent on mutually agreeable terms. Some of these lease agreements have price escalation clauses. There are no restrictions imposed by lease arrangements and there are no sub leases. There are no contingent rents. The lease payments of Rs, 6.31 cr. (Pr. Yr. Rs, 8.44 cr.) are recognized in the Statement of Profit and Loss under âRentâ under Note 39.
The future minimum lease payments and payment profile of non-cancellable operating leases are as under:
In respect of clause (i) to (vi) above, 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 (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.
Commitments:
a) Estimated amounts of contracts remaining to be executed on capital account and not provided for, net of advances Rs, 132.28 cr. ( Pr. Yr. Rs, 103.66 cr.).
b) Other Commitments - Non-cancellable operating leases (Refer note 45).
Category II- 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. Chandrakant M. Khetan Non-executive Director
Dr. Anil Kumar Non-executive Director
Mr. K. H. Viswanathan Non-executive Director
Mr. Prabhakar Dalal Non-executive Director
Dr. Anjana Grewal Non-executive Director
Mr. Arvind Agrawal Chief Financial Officer
Mr. Gaurang Shah Company Secretary
& Relatives of Key Management Personnel
Category III-Enterprise over which persons covered under Category II above are able to exercise significant control:
Gabs Investments Private Limited
Seth Bhagwandas Agrawal Charitable Trust
Ganga Exports being represented by Mr. Yogesh Agrawal, Mr. Rajesh Agrawal, Mr. Ravi Agrawal & Mr. Aayush Agrawal Yogesh Agrawal Trust, Trustee - Yogesh M Agrawal (w.e.f. 7th March 2017)
Rajesh Agrawal Trust, Trustee - Rajesh M Agrawal (w.e.f. 7th March 2017)
Ravi Agrawal Trust, Trustee - Ravi P Agrawal (w.e.f. 7th March 2017)
Ajanta Pharma Limited Group Gratuity Trust
Company has completed an independent evaluation for all international and domestic transactions for the year ended 31st March 2017 and has reviewed the same for the year ended 31st March 2016 to determine whether the transactions with associated enterprises are undertaken at arm''s length price. Based on the internal and external transfer pricing review and validation, Company believes that all transactions with associated enterprises are undertaken on the basis of arm''s length principle.
9. Contribution towards Corporate Social Responsibility:
The particulars of CSR expenditure are as follows:
a) Gross amount required to be spent by the company during the year is Rs, 8.42 cr. (Previous year: Rs, 6.09)
10.Note on foreign currency exposures on assets and liabilities:
During the year, Company has entered into forward exchange contract, being derivative instruments to mitigate foreign currency risk, 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 Company:
11. Excise duty includes Rs, 0.03 cr. (Pr. Yr. Rs, 0.12 cr.) being net impact of the excise duty provision on opening and closing stock.
12. 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 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. Company had invested in a JV Turkmenderman Ajanta Pharma Ltd. (TDAPL) about two decade back, where it had management control. However later on, company surrendered management control in favour of local partner and since then do not have any control on the same. Further TDAPL operates under severe restriction that significantly impairs its ability to transfer the funds. Hence, company impaired entire investment in TDAPL and considered as unrelated party. Company has been making efforts to divest this investment since last few years without any success.
14. Pre-operative expenses pending capitalization included in Capital Work-In-Progress (Refer note 8) represent direct attributable expenditure for setting up of plants prior to the date of commencement of commercial production. The same will be capitalized on completion of projects and commencement of commercial operations. The details of preoperative expenses are:
The charge relating to temporary differences during the year ended 31st March 2017 are primarily on account of property plant and equipment and gain on investment at FVTPL partially offset by provision for expired goods, provision for loss allowance, compensated absences, MAT credit entitlement. The credit to temporary differences during the year ended 31st March 2016 are primarily on account of Property plant and equipment and gain on investment at FVTPL partially offset by provision for expired goods, compensated absences, provision for loss allowance, forward Contract receivable
15. First-time adoption of Ind AS
Pursuant to the Companies (Indian Accounting Standard) Rules, 2015, Company has adopted 31st March 2017 as reporting date for first time adoption of Indian Accounting Standard (Ind-AS) and consequently 1st April 2015 as the transition date for preparation of financial statements. The financial statements for the year ended 31st March 2017, are the first financials, prepared in accordance with Ind-AS. Up to the Financial year ended 31st March 2016, Company prepared its financial statements in accordance with the Accounting Standards notified under the Section 133 of the Companies Act, 2013, read together with Companies (Accounts) Rules 2014 (Previous GAAP). For preparing these financial statements, opening balance sheet was prepared as at 1st April 2015 i.e. the date of transition to Ind-AS. The figures for the previous periods and for the year ended 31st March 2016 have been restated, regrouped and reclassified, wherever required to comply with Ind-AS and Schedule III to the Companies Act, 2013 and to make them comparable.
This note explains the principal adjustments made by Company in restating its financial statements prepared in accordance with the Previous GAAP, including the balance sheet as at 1st April 2015 and the financial statements as at and for the year ended 31st March 2016.
Exemptions:
Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS.
On transition to Ind AS, Company has applied the following exemptions:
Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as at 1st April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Company has elected to continue with the carrying value of all of intangible assets recognized as at 1st April 2015 measured as per previous GAAP and use that carrying value as the deemed cost of intangible assets.
Ind AS 102 Share-based Payment has not been applied to equity instruments in share-based payment transactions that vested before the date of transition to Ind AS.
Appendix C of Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. This assessment should be carried out at the inception of the contract or arrangement. However, Company has used Ind AS 101 exemption and assessed all arrangements based for embedded leases based on conditions in place as at the date of transition.
Company has elected to apply previous GAAP carrying amount of its investment in subsidiaries as deemed cost as on the date of transition to Ind AS.
Exceptions:
The following exceptions have been applied in accordance with Ind AS 101 in preparing the financial statements.
- Derecognition of financial assets and financial liabilities
Company has elected to apply the derecognition requirements for financial assets and financial liabilities in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.
- Classification and measurement of financial assets Company has classified the financial assets in accordance with Ind AS 109 on the basis of facts and circumstances that exist at the date of transition to Ind AS.
- Government Loans
As per Ind AS 101, Company applied the requirements in Ind AS 109, Financial Instruments, and Ind AS 20, Accounting for Government Grants and Disclosure of Government Assistance, prospectively to Sales Tax Deferral Loan existing at the date of transition to Ind ASs and has not recognized the corresponding benefit of the loan at a below-market rate of interest as a government grant. Company has used its previous GAAP carrying amount of the loan at the date of transition to Ind ASs as the carrying amount of the loan in the opening Ind AS Balance Sheet. As per Ind AS 109, this loan will be classified as at Amortized cost. Since there is no difference between the carrying amount and the amount to be paid, there will be no impact of Effective Interest Rate i.e. no discounting/ unwinding is required.
Measurement and recognition difference between Ind AS and Previous GAAP for the year ended 31st March 2016.
1) Fair Valuation of Investments
Under the previous GAAP, investments in equity instruments and mutual funds were classified as long term investments or current investments based on the intended holding period and reliability. Long - Term investments were carried at cost less provision for other than the temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS these investments are required to be measured at fair value. The resulting fair value changes of these investments have been recognized in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended 31st March 2016. This increased the retained earnings by Rs, 6.79 cr. (net of differed tax) as at 31st March 2016 (1st April 2015 - Rs, 3.75 cr.).
2) Proposed dividend
Under Previous GAAP, proposed dividend including dividend distribution tax (DDT), are recognized as liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, proposed dividend is recognized as liability in the period in which it is declared by Company, usually when approved by shareholders in a general meeting, or paid.
Therefore, the dividend liability (proposed dividend) including dividend distribution tax liability amounting to Rs, 58.51 cr. has been derecognized in the retained earnings as on the date of transition.
Proposed dividend including dividend distribution tax liability amounting to Rs, 58.51 cr. which was derecognized as on the transition date, has been recognized in retained earnings during the year ended 31st March, 2016 as declared and paid.
3) Defined benefit obligation
Both under Previous GAAP & Ind AS, Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under Previous GAAP, the entire cost related to postemployment defined benefit plans, including actuarial gains and losses, were charged to profit or loss. Under Ind AS, remeasurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income. Thus, employee benefit expenses reduced by Rs, 0.35 cr. and is recognized in other comprehensive income Rs, 0.23 cr. (net of deffered tax) during the year ended 31st March 2016.
4) Deferred tax
Previous GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under previous GAAP.
In addition, the various transitional adjustments lead to different temporary differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity.
5) Other comprehensive income
Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as âother comprehensive income'' includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under the previous GAAP.
6) Statement of cash flows
The transition from Previous GAAP to Ind AS has not had a material impact on the statement of cash flows.
Under Ind AS, bank overdrafts repayable on demand and which form an integral part of the cash management process are included in cash and cash equivalents for the purpose of presentation of statement of cash flows. Under previous GAAP, bank overdrafts were considered as part of borrowings and movements in bank overdrafts were shown as part of financing activities. Consequently, cash and cash equivalents have reduced by Rs, 11.58 cr. as at 31st March 2016 (1st April 2015 - Rs, 12.82 cr.)
7) Excise duty :
Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended 31st March 2016 by INR Rs, 15.39 cr. There is no impact on the total equity and profit.
8) Cash Discount:
Under previous GAAP, cash discount of Rs, 0.11 cr. was recognized as part of other expenses which has been adjusted against the revenue under Ind AS during the year ended 31st March 2016. There is no impact on the total equity and profit.
In the preparation of these Ind-AS Financial Statements, Company has made several presentation differences between previous GAAP and Ind-AS. These differences have no impact on reported profit or total equity. Accordingly, some assets and liabilities have been reclassified into another line item under Ind-AS at the date of transition. Further, in these Financial Statements, some line items are described differently under Ind-AS compared to previous GAAP, although the assets and liabilities included in these line items are unaffected.
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 Â 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 Â 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 Â 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 Â 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.
Mar 31, 2011
1. Contingent Liabilities
i) Letter of Credit opened Rs. 1,529.44 Lacs (Rs. 671.46 Lacs).
ii) Excise demands disputed by Company pending in appeal Rs. Nil (Rs.
49.44 Lacs).
iii) Income tax demands disputed by Company pending in appeal Rs.
379.92Lacs (Rs. 355.83 Lacs). Amount paid under protest Rs. 80.00 Lacs
(Rs. 82.00 Lacs).
iv) Custom duty on import under Advance License Scheme, pending
fulfilment of export obligation is Rs. 58.39 Lacs (Rs. 90.56 Lacs).
v) Estimated amount of contracts remaining to be executed on capital
account and not provided for, net of advances Rs. 1,322.60 Lacs (Rs.
628.75 Lacs).
vi) Unpaid allotment money in respect of
(a) Common Stock of Ajanta Pharma Inc., wholly owned subsidiary, Rs.
65.99 Lacs (Rs. 66.44 Lacs) equivalent to USD 1.48 Lacs (USD 1.48
Lacs).
(b) Shares of Ajanta Pharma UK Ltd, wholly owned subsidiary, Rs. 7.17
Lacs (Rs. Nil) equivalent to UK Pound 0.10 Lacs(UK Pound Nil ).
vii) Future cash outflows in respect of liability under clause (ii) to
(iv) is dependent on decisions by relevant authorities of respective
disputes, in respect of clause (v) liability is dependant on terms
agreed upon with the parties and in respect of clause (vi) it is
dependent on call made by investee company
2. Sundry debtors include due from foreign subsidiary companies -
Ajanta Pharma (Mauritius) Ltd. Rs. 700.45 Lacs (Rs. 2,084.76 Lacs) and
Ajanta Pharma Philippines Inc. Rs. 273.43 Lacs (Rs. 78.63 Lacs).
3. Loans taken, secured and unsecured, includes amount due within a
year Rs. 2,225.67 Lacs (Rs. 2,727.09 Lacs).
4. Company has approved at its Board Meeting held on 29th October
2009, buy back ("SchemeÃ) of equity shares through stock exchanges
involving aggregate amount upto Rs. 1,136 Lacs. The Company has not
purchased any share under the aforesaid Scheme which has ended during
the year.
5. Disclosure of Sundry Creditors 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, 2006Ã (and relied upon by the auditors). Amount
outstanding (not overdue) as on 31st March, 2011, to Micro, Small and
Medium Enterprises on account of principal amount aggregate to Rs.
117.42 Lacs (Rs.44.88 Lacs) and Interest Rs. Nil (Rs. Nil) and interest
paid during the year Rs. Nil (Rs. Nil).
6. The Company has one segment of activity namely "PharmaceuticalsÃ.
7. During the year, MAT liability has been provided which is eligible
for set off in subsequent years. The same has been treated as
recoverable and shown as MAT Credit Entitlement. Provision for current
tax includes wealth tax Rs. 1.15 Lacs (Rs. 0.39 Lacs).
8. Employee Benefits
As required by Accounting Standard-15 ÃEmployee Benefitsà the
disclosures are as under :
Defined Contribution Plans
The Company offers its employees defined contribution plans in the form
of Provident Fund (PF) and Employeesà Pension Scheme (EPS) with the
government, and certain state plans such as Employeesà State Insurance
(ESI). PF and EPS cover substantially all regular employees and the ESI
covers certain workers. Contributions are made to the GovernmentÃs
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 employeeÃs salary.
Defined Benefit Plans
Gratuity: The Company makes annual contributions to Employeesà 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:
a. 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.
b. 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.
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.
9. Disclosure for operating leases under Accounting Standard
19-"LeasesÃ:
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. 280.93 Lacs (Rs. 205.93 Lacs) are recognised in the
Profit and Loss Account under "Rent, Rates & Taxesà under Schedule 17.
10. Excise duty related to differences between closing and opening
stock and other adjustments are stated under operating and other
expenses. Excise duty related to turnover is reduced from the gross
turnover.
11. In terms of the requirements of the Accounting standards-28 on
"Impairment of Assetsà 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.
12. 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 Assetsà 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.
13. Related party disclosure with whom transactions have taken place
during the year as required by Accounting Standards 18 are given below:
-
Relationships:
Category I- Subsidiaries:
Ajanta Pharma (Mauritius) Ltd (APML)
Ajanta Pharma Inc. (AP Inc. USA)
Ajanta Pharma Philippines Inc. (APPh Inc.) (Subsidiary of APML)
Ajanta Pharma UK Ltd (AP UK)
Category II- Associate Companies:
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
& 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
14. 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
CompanyÃs 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.
15. Particulars of Installed Capacity :
a) In terms of Press Note No. 4 (1994 Series) dated 25.10.1994 issued
by the Department of Industrial Development, Ministry of Industry,
Government of India, Industrial Licensing has been abolished in respect
of certain formulations, bulk drugs and drug intermediates. Hence,
there is no registered/ licensed capacity for formulations, bulk drugs
and drug intermediates of the Company.
b) Installed capacities being technical matter, have not been verified
by the Auditors.
16. Consumption of consumable stores is wholly indigenous in the
current and previous year.
17. Previous yearÃs figures are regrouped and recast wherever
required. Figures in brackets are of previous year.
Mar 31, 2010
1. Contingent Liabilities
i) Letter of Credit opened Rs. 671.46 Lacs (Rs. 811.68 Lacs).
ii) Excise demands disputed by Company pending in appeal Rs.49.44 Lacs
(Rs.49.44 Lacs).
iii) Income tax demands disputed by Company pending in appeal Rs.
355.83 Lacs (Rs.342.31 Lacs). Amount paid under protest Rs.82.00 Lacs
(Rs.80 Lacs).
iv) Custom duty on import under Advance License Scheme, pending
fulfilment of export obligation is Rs.90.56 Lacs (Rs. 398.20 Lacs).
v) Estimated amount of contracts remaining to be executed on capital
account and not provided for, net of advances Rs.628.75 Lacs
(Rs. 1,775.10 Lacs). vi) Unpaid allotment money in respect of Common
Stock of Ajanta Pharma Inc., wholly owned subsidiary, Rs.66.44
Lacs (Rs.75.05 Lacs) equivalent to USD 1.48 Lacs (USD 1.48 Lacs).
vii) Future cash outflows in respect of liability under clause (ii)
to (iv) is dependent on decisions by relevant authorities of
respective disputes, in respect of clause (v) liability is dependant
on terms agreed upon with the parties and in respect of clause (vi) it
is dependent on call made by investee company.
3. Sundry debtors include due from foreign subsidiary companies -
Ajanta Pharma (Mauritius) Ltd. Rs. 2,084.76 Lacs (Rs 338.52 Lacs) and
Ajanta Pharma Philippines Inc. Rs. 78.63 Lacs ( Rs. Nil).
4. Loans taken, secured and unsecured, includes amount due within a
year Rs. 2,727.09 Lacs (Rs.1,817.06 Lacs).
5. Deposit includes Rs. Nil (Rs. 55.00 Lacs) given to a director in
earlier years against premises taken on lease.
6. Company has approved at itÃs Board Meeting held on 29th October
2009, buy back (ÃSchemeÃ) of equity shares through stock exchanges
involving aggregate amount upto Rs.1,136 Lacs. Pending approval from
relevant authorities, Company has not purchased any share under the
aforesaid Scheme during the year.
7. Disclosure of Sundry Creditors under Current Liabilities is based
on the information available with the Company regarding the status of
the suppliers as defined under the ÃMicro, Small and Medium Enterprises
Development Act, 2006Ã (and relied upon by the auditors). Amount
outstanding (not overdue) as on 31st March, 2010, to Micro, Small and
Medium Enterprises on account of principal amount aggregate to Rs.
44.88 Lacs (Rs. 70.91 Lacs) and Interest Rs. Nil (Rs. Nil) and interest
paid during the year Rs. Nil (Rs. Nil).
8. The Company has one segment of activity namely ÃPharmaceuticalsÃ.
9. During the year, MAT liability has been provided which is eligible
for set off in subsequent years. The same has been treated as
recoverable and shown as MAT Credit Entitlement. Provision for current
tax includes wealth tax Rs. 0.39 Lacs (Rs. 0.47 Lacs).
10. Revenue expenses on Research & Development incurred during the
year and shown in respective heads of account, except depreciation,
are:
11. Employee Benefits
As required by Accounting Standard-15 ÃEmployee Benefitsà the
disclosures are as under:
Defined Contribution Plans
The Company offers its employees defined contribution plans in the form
of Provident Fund (PF) and Employeesà Pension Scheme (EPS) with the
government, and certain state plans such as Employeesà State Insurance
(ESI). PF and EPS cover substantially all regular employees and the ESI
covers certain workers. Contributions are made to the GovernmentÃs
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 employeeÃs salary.
During the year, the Company has recognised the following amounts in
the Account:
Defined Benefit Plans
Gratuity: The Company makes annual contributions to Employeesà 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:
a. 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.
b. 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, 2010 are as under :
12. Disclosure for operating leases under Accounting Standard 19-Ã
LeasesÃ:
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
not non-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. 205.93 Lacs ( Rs. 204.80 Lacs) are recognised
in the Profit and Loss Account under à Rent, Rates & Taxesà under
Schedule 17. No contingent rents are recognised in the Profit & Loss
Account.
13. Excise duty related to differences between closing and opening
stock and other adjustments are stated under operating and other
expenses. Excise duty related to turnover is reduced from the gross
turnover.
14. In terms of the requirements of the Accounting standards-28 on
ÃImpairment of Assetsà 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.
15. As per the best estimate of the management, no provision is
required to be made as per Accounting Standard (AS) 29 ÃProvision,
Contingent Liabilities and Contingent Assetsà 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.
c) Remittance in foreign currency on account of dividend:
The Company has paid dividend in respect of shares held by Non-Resident
Shareholders, on repatriation basis. This inter-alia includes portfolio
investment and direct investment, where the amount is also credited to
Non-Resident External A/c. The exact amount of dividend remitted in
foreign currency cannot be ascertained. The total amount remittable in
this respect is given below:
16. Note on hedge and unhedged foreign currency assets and
liabilities:
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. Forward Exchange Contract to buy/sell USD 105 Lacs
(USD.16.55 Lacs) is outstanding as at the year end. The year end
foreign currency exposures that have not been hedged by a derivative
instrument or otherwise are as below:
17. 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
CompanyÃs policy, security deposits paid towards premises taken on
leave and license basis have not been considered. Hence, there are no
investments by loanees in the shares of the Parent Company and/or
subsidiary companies.
18. Particulars of Installed Capacity :
a) In terms of Press Note No. 4 (1994 Series) dated 25.10.1994 issued
by the Department of Industrial Development, Ministry of Industry,
Government of India, Industrial Licensing has been abolished in respect
of certain formulations, bulk drugs and drug intermediates. Hence,
there is no registered/ licensed capacity for formulations, bulk drugs
and drug intermediates of the Company
b) Installed capacities being technical matter, have not been verified
by the Auditors.
19. Consumption of consumable stores is wholly indigenous in the
current and previous year.
20. Previous yearÃs figures are regrouped and recast wherever
required. Figures in brackets are of previous year.
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