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Notes to Accounts of Alpa Laboratories Ltd.

Mar 31, 2015

1. * Terms and Rights attached to Equity Shares.

The Company has only one class of equity shares having a par value of Rs.10 per share. Each Shareholder is eligible for one vote per share. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion of their shareholding.

Details of terms of repayment for the long term borrowings and security provided in respect of the secured long term borrowings:

A) Terms of Repayment :

1) Corporate Loan: Was repayable in 36 monthly installments commencing from April 2012. Last installment was due in March 2015,but was fully repaid in October 2014. Rate of interest was 13.50% p.a. till repayment. (Previous year: 13.25%)

2) Machinery Term Loan: Was repayable in 60 monthly installments commencing from June 2013. Last installment was due in May 2018,but was fully repaid in October 2014. Rate of interest was 13.50% p.a. till repayment. (Previous year: 13.25%)

B) Security Provided :

Term loans were secured by mortgage of immovable properties including factory land, building structures and all Plant and Machinery attached to the earth or permanently fastened to anything attached to the earth, both present and future & hypothecation of assets purchased from term loan. Further, the loans were personally guaranteed by the Directors.

2. Security Provided:

Working Capital Loan is secured by way of book debts and hypothecation of present and future stock of raw material, finished goods, stock in process consumables, stores & spares, packing material etc.

The Company makes Provident Fund contributions under defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs.29.97 lacs (Previous Year Rs.15.60 lacs) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

A. Relationships:

i. Subsidiary Companies

a. Norfolk Mercantile Private Limited

ii. Key Management Personnel

a. P. R. Patel, MD b. M. S. Chawla, Director c. P. C. Shah, Director

d. Jayesh Patel, CEO e. Paresh Chawla, COO f. B. C. Shah, CFO

iii. Relatives of Key Management Personnel and their enterprises where transactions have taken place

a. Shitul Shah b. Soni Chawla c. Nayana Patel

d. Rupal Shah e. Vinit Shah

3. Contingent Liabilities & Commitments (to the extent not provided for) (RS. in lacs)

2015 2014

a. Bank Guarantees given to various government departments for tenders for 31 00 50 04 supply of medicines

b. Liability in respect of arbitration proceedings (Refer Note No. 39) 0.04 -

c. Disputed demands before relevant authorities :

Value Added Tax 16.93 16.93

Central Sales Tax 31.52 31.52

Income Tax 21.00 21.00

4. Court Case has been filed against Innovec Laboratories Private Limited for '28.95 lacs (Previous Year: Rs. 28.95 lacs) for recovery of outstanding amounts.

5.segmentiReporting

a. As the Company operates in the single segment of Drugs and Chemicals which is the Primary Reportable Segment as per Accounting Standard (AS-17) "Segment Reporting" issued by the Institute of Chartered Accountants of India, no separate disclosure pertaining to attributable Revenue, Profits, Assets, Liabilities and Capital Employed are given.

6. As per the terms of agreement dated 01st October 2014, the Company's manufacturing unit at Pithampur (Unit-II) has been transferred on slump sale basis to Ipca Laboratories Limited, w.e.f. 01st October 2014, for a total consideration of Rs.6,400 lacs.

Further,non-complete fees amounting to Rs. 10.00 lacs has been received by the company.

7. Schedule II Compliance

a. In accordance with the provisions of Schedule II of the Act, in case of fixed assets which have completed their useful life as at 01st April 2014, the carrying value (net of residual value) amounting to Rs.34.88 lacs (net of deferred tax of Rs.17.96 lacs) as a transitional provision has been recognized in the retained earnings.

b. Further, in case of assets acquired prior to 01st April 2014, the carrying value of assets (net of residual value) is depreciated over the remaining useful life as determined effective from 01st April 2014.

c. Depreciation and amortization expenses for the year would have been lower by Rs.153.42 lacs, had the Company continued with the previous assessment of useful life such assets.

8. During the year, the Company has invested an amount of Rs.1.00 lacs by purchasing shares of Norfolk Mercantile Private limited making it a wholly owned subsidiary of the company.

9. During the year, Ranbaxy Laboratories Limited (Petitioner) filed a Petition in the High Court at New Delhi to prevent the Company from selling its Unit-II division at Pithampur. To expedite the disposing of the said petition, the Company agreed to enter into arbitration proceedings with the Petitioner and furnish a bank guarantee to the tune of Rs.300.00 lacs in the name of the Petitioner which shall remain live till the final disposal of the arbitration proceedings. The Honorable High Court was pleased to dispose off the petition without restricting the Company from selling its Unit-II division and appointing an arbitrator to settler the claims and counter claims made by the parties against each other. The Company is of the view, supported by legal opinion, that no provision is required to made in the accounts as it expects favorable outcome of the arbitration proceedings and hence adjustments. if any, will be recorded by the company on final outcome of the matter.

10. The Company has invested during the F.Y. 2014-15 in the unsecured debentures issued by its wholly owned subsidiary "Norfolk Mercantile Private Limited" amounting to Rs.1,010 lacs for the purpose of meeting the working capital requirements and capital /investment requirement of the Company on the following terms and conditions:

a. The debentures shall compulsory be converted into fully paid shares of the Company.

b. The debentures shall have a term of 20 years from the date of issue.

c. The debentures shall earn interest at the rate of 9% payable at the end of each year till debentures are converted into shares.

d. No interest shall be payable in the year of conversion or buyback.

e. The first interest accrual date shall be 31/03/2016.

f. Interest shall be paid on a yearly basis, subject to availability of funds. In case interest is not paid on or before the end of the following quarter following the end of each financial year, the Company shall also pay interest of 9% on outstanding interest till

11. Significant Accounting Policies and Practices adopted by the Company are disclosed in the Statement annexed to these

12. Previous Year Figures

Comparative financial information is presented in accordance with the corresponding figure reporting framework as set out in Standards on Auditing 710 on "Comparatives". Previous Year figures have been regrouped or rearranged, as wherever appropriate to correspond to figures of the current year.


Mar 31, 2014

1. Terms and Rights attached to Equity Shares.

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each Shareholder is eligible for one vote per share. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion of their shareholding.

2. A) Terms of Repayment :

1) Corporate Loan: Repayable in 36 monthly installments commencing from April 2012. Last instalment due in March 2015. Rate of interest 13.25% p.a. as at year end. (Previous year 13.75% p.a.)

2) Machinery Term Loan: Repayable in 60 monthly installments commencing from June 2013. Last installment due in May 2018. Rate of interest 13.25% p.a. as at year end. (Previous year 13.75% p.a.)

B) Security Provided :

Term loans are secured by mortgage of immovable properties including factory land, building structures and all Plant and Machinery attached to the earth or permanently fastened to anything attached to the earth, both present and future & hypothecation of assets purchased from term loan. Further, the loans are personally guaranteed by the Directors.

3. Contingent Liabilities & Commitments (Rs. in lacs) (to the extent not provided for) 2014 2013 a. Bank Guarantees of Rs. 50.04 lacs (Previous Year - Rs. 77.91 lacs) have been given to various government departments for tenders for supply of medicines.

b. Bank Guarantee of Rs. Nil (Previous Year - Rs. 17.85 lacs) has been given to Deputy Commissioner of Customs against import of capital goods under Export Promotion Capital Goods Scheme.

c. Bank Guarantee of Rs. Nil (Previous Year - Rs. 3.70 lacs) has been given in favor of President of India through Commissioner of Customs Nhava Sheva, Raigarh for import of Raw Materials without payment of import duty under DEEC Scheme.

d. Bank Guarantee of Rs. Nil (Previous Year - Rs. 0.83 lacs) has been given in favor of President of India through Deputy Commissioner of Central Excise for Bond for procurement of Raw Material ( Methyl Prednisolone Buffered Sterile) Without Payment of Duty for production of Life Saving Drugs.

e. Notices have been received form Central Excise Department Range Pithampur for Late Filling of Returns for few months in F.Y. 2012-13 for which obligation may arise. Due to pendency of case amount of obligation can not be ascertained.

f. Disputed demands before relevant authorities :

Value Added Tax 16.93 16.93

Central Sales Tax 31.52 31.52

Income Tax 21.00 21.00

Service Tax - 37.85

4. Court Cases have been filed against Innovec Laboratories Private Limited for `28.95 lacs (Previous Year – `28.95 lacs) for recovery of outstanding amounts.

5. Segment Reporting

a. As the Company operates in the single segment of Drugs and Chemicals which is the Primary Reportable Segment as per Accounting Standard (AS-17) "Segment Reporting" issued by the Institute of Chartered Accountants of India, no separate disclosure pertaining to attributable Revenue, Profits, Assets, Liabilities and Capital Employed are given.

b. The secondary segment based on geographical segmentation is considered to be business Outside India and Within India.

6. The Company has passed a special resolution on 04th April 2014 by way of Postal Ballot authorizing the Board to dispose off its Unit at 481, 470, 471 Sector III Industrial Area, Pithampur, District Dhar (M.P.) along with all the employees as well as the assets and liabilities of the said undertaking including the concerned licenses, permits, consents, approvals whatsoever, as a "going concern" and by way of a slump sale or any other mechanism in the interest of the Company at a consideration as may be decided by the Board of Directors and that such consideration not be less than Rs. 50 Crores (Rupees Fifty Crores Only) to such prospective buyers/ parties and along with non compete undertaking from the Company and the promoters of the Company to refrain from carrying on a similar business, and on such other terms and conditions as may be decided by the Board. The said unit was mainly financed out of the IPO proceeds of the Company received in the month of July, 2007.

7. Significant Accounting Policies and Practices adopted by the Company are disclosed in the Statement annexed to these

8. Previous Year Figures

Comparative financial information is presented in accordance with the corresponding figure reporting framework as set out in Standards on Auditing 710 on "Comparatives". Previous Year figures have been regrouped or rearranged, as wherever


Mar 31, 2013

(Rs.in lacs)

1. Contingent Liabilities & Commitments (to the extent not provided for) 2013 2012

a. Bank Guarantees of Rs.77.91 lacs (Previous Year Rs.58.37 lacs) have been given to various government departments for tenders for supply of medicines.

b. Bank Guarantee of Rs.17.85 lacs (Previous Year - Rs.17.85 lacs) has been given to Deputy Commissioner of Customs against import of capital goods under Export Promotion Capital Goods Scheme for a period of ten years ending 09/02/2020.

c. Bank Guarantee of Rs.3.70 lacs (Previous Year - Rs.3.70 lacs) has been given in favor of President of India through Commissioner of Customs Nhava Sheva, Raigarh for import of Raw Materials without payment of import duty under DEEC Scheme for a period of three years ending 30 Aug 2013.

d. Bank Guarantee of Rs.0.83 lacs (Previous Year - Nil) has been given in favor of President of India through Deputy Commissioner of Central Excise for Bond for procurement of Raw Material ( Methyl Prednisolone Buffered Sterile) Without Payment of Duty for production of Life Saving Drugs for a period of one year ending 29 Aug 2013.

e. Disputed demands before relevant authorities

2. Court Cases have been filed against M/s Rajiv Pharma Udyog & Innovec Laboratories Private Limited for Rs.0.59 lacs and Rs.28.95 lacs respectively, for recovery of outstanding amounts.

3. In compliance with Para 9 of Accounting Standard-10 issued by The Institute of Chartered Accountants of India administration and other general overheads up to the date of the commencement of commercial production i.e.18 Oct 2012 and which are specifically attributable to construction of a project amounting to Rs.1,461.14 lacs have been included as part of the cost of the new unit at Plot No. 470,471 & 481 at Sector-III, Pithampur Dist. Dhar

The same have been further appropriated to the cost of fixed assets commissioned, in the proportion of their individual cost to the total cost of the new plant.

4. Segment Reporting

a. As the Company operates in the single segment of Drugs and Chemicals which is the Primary Reportable Segment as per Accounting Standard (AS-17) "Segment Reporting" issued by the Institute of Chartered Accountants of India, no separate disclosure pertaining to attributable Revenue, Profits, Assets, Liabilities and Capital Employed are given.

b. The secondary segment based on geographical segmentation is considered to be business Outside India and Within India.

5. The Company successfully completed the installation of its Unit-II at Pithampur, District Dhar, Madhya Pradesh for manufacturing of High Potency Tablets and commenced commercial production with effect from 18th Oct, 2012.

b. Capital WIP includes Advances for Capital Expenditure Nil ( P.Y.- Rs.115.48 lacs)

6. Change in Accounting Policy

In order to make presentation of Financial Statements of the Company more appropriate, the Company has changed the policy of recognizing expenses relating to consumption of columns used for providing analytical services from the year of acquisition to the year of actual consumption. As a result the Company has recognized stock of unused columns which are used for providing analytical services amounting to Rs.35.38 lacs. Due to such change of policy, the loss for the year has been understated and reserves have been overstated by Rs.35.38 lacs as compared to previous accounting policy.

7. Significant Accounting Policies and Practices adopted by the Company are disclosed in the Statement annexed to these Financial Statements as Annexure A.

8. Previous Year Figures

Comparative financial information is presented in accordance with the corresponding figure reporting framework as set out in Standards on Auditing 710 on "Comparatives". Previous Year figures have been regrouped or rearranged, as wherever appropriate to correspond to figures of the current year.

COMPANY BACKGROUND

Incorporated as Alpa Laboratories Private Limited on 18th March 1988 under the Companies Act, 1956 and converted to public limited company on 03rd September 1998 with the name of Alpa Laboratories Limited. The Company has been listed on the Bombay Stock Exchange and the National Stock Exchange since 06th August 2007.


Mar 31, 2012

COMPANY BACKGROUND

Incorporated as Alpa Laboratories Private Limited on 18th March, 1988 under the Companies Act, 1956 and converted to public limited company on 03rd September, 1998 with the name of Alpa Laboratories Limited. The Company has been listed on the Bombay Stock Exchange and the National Stock Exchange since 06th August, 2007.

- Terms and Rights attached to Equity Shares.

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each Shareholder is eligible for one vote per share. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets, after distribution of all preferential amounts, in proportion of their shareholding.

- Terms of Repayment

Repayable in 36 monthly installments commencing from April, 2012. Last installment due in March, 2015. Rate of interest 13% p.a. as at year end.

- Security Provided

Term loan is secured by hypothecation of present and future stock of raw material, finished goods, stock in process consumables, stores & spares, packing material etc.

- Security Provided

Working capital loans are secured by hypothecation of present and future stock of raw material, finished goods, stock in process consumables, stores & spares, packing material etc.

The Company has recognized deferred tax arising on account of timing differences being the difference between the taxable income and accounting income, that originates in one period and is capable of reversal in one or more subsequent period in compliance with Accounting Standard ("AS-22") - "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India.

1. Contingent Liabilities (to the extent no provided for)

(in Rs.)

2012 2011

Bank Guarantees given to various government departments for tenders 62,07,373 62,58,273

Bank Guarantees given to Deputy Commissioner of Customs against import of capital goods under Export Promotion Capital Goods Scheme for a period of ten years ending 09/02/2020 17,85,000 17,85,000

Disputed demand of Value Added Tax 36,66,924 48,40,184

Disputed demand of Central Sales Tax 66,32,240 47,30,934

Disputed demand of Entry Tax - 45,30,456

Total Contingent Liabilities (to the extent not provided for) 1,82,91,537 2,21,44,847

2. Court Cases have been filed against M/s Rajiv Pharma Udyog & Innovec Laboratories Private Limited for Rs. 59,420 and Rs.28,98,502 respectively for recovery fo outstanding amounts.

3. Expenses of Rs. 13,11,50,915 (Previous Year Rs. 9,72,52,860) incurred by the Company for the new unit has been treated as pre-operative expenses.

As the Company is only engaged in Pharmaceutical Business which is considered the Primary Reportable Segment as per Accounting Standard (AS-17) "Segment Reporting" issued by the the Institute of Chartered Accountants of India, no separate disclosure pertaining to attributable Revenue, Profits, Assets, Liabilities and Capital employed are given.

4. Interest Received includes Tax Deducted at Source amounting to Rs. 13,122 (Previous Year Rs. 45,332) on such interest.

5. The Company has completed the basic installation of their new unit at Pithampur, District Dhar, MP for manufacturing of High Potency Tablets. However, the operational validation of the same has not been completed which would certify the is usability of the same for production activity. As such the same cannot be put to use till such validation is complete.

6. Significant Accounting Policies and Practices adopted by the Company are disclosed in the Statement annexed to these Financial Statements as Annexure A.

7. Previous Year Figures

The Financial Statements for the year ended 31st March 2011 had been prepared as per the then applicable pre-revised Schedule VI to the Companies Act,1956. Consequent to the notification under the Companies Act,1956, the Financial Statements for the year ended 31st March 2012 have been prepared under the revised Schedule VI. The previous year figures have also been reclassified to conform to this year's classification.


Mar 31, 2010

1. Loan Funds:

a. Term Loans: Secured by hypothecation of Building, Plant & Machinery and personal guarantee of directors.

b. Working Capital Loans: Secured by hypothecation of stocks & book debts of the Company and personal guarantee and collateral security of directors and other third parties.

2. Court Case were filed against M/s Arvind Agencies and M/s Rajiv Pharma Udyog for Rs. 3.57 lacs, and Rs. 2.27 lacs respectively, for recovery of outstanding amounts.

3. Contingent liabilities not provided for:

a. Bank Guarantees of Rs. 81.06 lacs (Previous Year Rs. 82.98 lacs) have been given to various government departments for tenders for supply of medicines.

b. Disputed demands before relevant authorities:

Rs. in lacs

Year Ended 31st Mar, 2010 Year Ended 31st Mar, 2009

Value Added Tax 48.40 48.40

Central Sales Tax 47.31 47.31

Entry Tax 45.59 45.59

4. Provision for Gratuity :

Accounting Standard - 15 ("AS-15") on "Employees Benefits" [AS-15 (Revised)] requires an enterprise to recognize its obligation and employee benefits cost under defined benefit plans such as Gratuity based on actuarial valuation. The obligation and employee benefits cost are to be reflected in the balance sheet and profit and loss account, respectively.

As regards gratuity, the Company is under the Employee Group Gratuity Scheme of the Life Insurance Corporation of India ("LIC") and as per their renewal intimation, the Company has contributed a sum of Rs. 7.00 lacs and Rs. 11.06 lacs are outstanding as on 31st March, 2010.

5. Expenses of Rs. 704.33 lacs (Previous Year Rs. 585.97 lacs) incurred by the Company for new unit has been treated as pre-operative expenses for the year.

6. In cases where letters of confirmation have been received from parties, book balances have been generally reconciled and adjusted, if required. In other cases, balances in accounts of sundry debtors, sundry creditors and advances or deposits have been taken as per books of account.

7. The Company is operating in the single segment of Drugs & Chemicals. All the activities of the Company revolve around the main business. Further, the Company does not have any separate reportable geographical segments in accordance with Accounting Standard – 17 on "Segmental Reporting". As such there are no separate reportable segments as per said accounting standard.

8. Interest received includes tax deducted at source on such interest and amounts to Rs 15.40 lacs (Previous Year Rs. 38.95 lacs).

9. Significant accounting policies and practice adopted by the company are disclosed through Annexure I to these accounts.

10. Additional information pursuant to the provisions of paragraph 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956 are disclosed through Annexure II to these accounts.

11. Additional information pursuant to the provisions of Part IV of Schedule VI to the Companies Act, 1956 are disclosed through Annexure III to these accounts.

12. Previous Year Figures:

Comparative financial information is presented in accordance with the Corresponding figure reporting framework as set out in Standards on Auditing 710 on "Comparatives". Previous years figures have been regrouped or rearranged, as wherever appropriate to correspond to figures of the current year except interest expenditure for the current period has been shown net of interest received including tax deducted at source but not for previous periods, neither of which have an impact on net profit.