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Accounting Policies of Bafna Pharmaceuticals Ltd. Company

Mar 31, 2019

3 Basis of measurement

The financial statements have been prepared on the basis of IND AS formats, however, values of major items of current assets and liabilities have not been measured at Fair values on account of the following series of events which commenced at the end of the accounting period 2018-19, and traversed into the current period as well.

NCLT Matter in Directors report

ARIES an Operational Creditor has filed under Section 9 of The Insolvency and Bankruptcy Code 2016 a Petition with The National Company Law Tribunal (NCLT), Single Bench, Chennai which has been admitted as CP/682/ IB/2017 against the Company. The National Company Law Tribunal, Single Bench, Chennai has passed an order on 16th July 2018 for initiation of Corporate Insolvency Resolution Process (CIRP) against the Company and declared moratorium and appointed Mr. Gopalsamy Ganesh Babu as an Interim Resolution Professional (IRP). IRP conducted Committee of Creditors (COC) and subsequently Mr. RadhakrishnanDharmarajan was appointed as Resolution Professional (RP).

Information Memorandum was presented to COC members after obtaining non disclosure agreement.

The RP informed the members that corporate debtor being MSME and eligible for submission of Resolution plan and the COC deferred the issuance of EOI considering the MHRA audit in the COC meeting held on 27.09.2018 and 30.11.2018 stating that there was Revival cum withdrawl plan under IBC submitted in the Resolution Plan by Mr, BafnaMahaveer Chand Since, the Revival cum Withdrawl plan could not garner the desired vote, The COC had asked Mr. BafnaMahaveer Chand to submit a comprehensive Resolution Plan taking care of all the stake holders.

Accordingly, Mr. Mahaveer Chand Bafna (Resolution Applicant) submitted resolution plan which was approved by the COC.

The resolution Plan , approved by COC was submitted to the Honorable NCLT, Chennai for approval. Honourable NCLT, Chennai had approved the resolution plan vide its order dated 01st February 2019 and copy of the said order was received by the company of 04th Febuary 2019The same was intimated to the Stock exchanges on 05th February 2019

The salient features of Resolution Plan.:-Payments as per resolution plan:

Financial creditors-

70% of admitted claims of all financial creditors i.e SBI, IDBI, DCB, DBS,BOC will be payable.

Total claims admitted Rs.49.23 Crs (payment proposed Rs.34.46 Crs.)

Operational Creditors - Total payment Rs 6.53 Crs

ESI and PF dues - Rs.1.94Crs Workmen dues - Rs.0.24 Crs Employees dues - Rs.0.32 Crs Statutory liabilities - Rs.0.13 Crs Other liabilities - Rs.0.01 Crs Contingent liabilities - Rs. NIL

For the purpose of resolution plan, the liability arising out of the said case, if any, is being considered as deemed crystallized as on the Resolution Plan approval date. Hence the Resolution Applicant is not disputing the above liabilities any further and instead considering them as deemed crystallized and admitted. Simultaneously, the Resolution Applicant is proposing to pay NIL value against all the contingent liabilities and legal cases pending against the Company.

Further any liability crystallizing out of the continent liabilities or disputed legal cases of the Corporate Debtor or any other unknown or unclaimed liability pertaining to a transaction or incident dating to a period prior to the Insolvency Commencement date or during the CIRP which does not find a place in the approved Resolution Plan, shall be deemed to have lapsed on the approval of the plan; and the Corporate Debtor shall be deemed to have been duly discharged from all legal liability arising from such antecedent claims.

The approved Resolution Plan also covers the writing off Slow Moving Inventories, and Debtors , any Recovery from such current assets shall be written back in the year of Recovery. Any Long pending dues from suppliers of the earlier years which could not be recovered in cash or kind shall also be written off, any Recovery from such current assets shall be written back in the year of Recovery.

Equity shareholders- the capital of existing equity shareholders shall be reduced to 10% of the current holding

i.e 2.36 crores shall be reduced to 0.236 crores.

Investment in working capital- The additional need based working capital of Rs.10 Crores shall be invested in the Corporate Debtor for revival of the organization.

Investment in fixed assets- The Resolution Applicant and his investors shall invest in Capex which shall amount to Rs.3.5 Crores in year 1.

Management and control of business- the Management of Corporate Debtor shall vest in the re-constituted Board of Directors and Resolution Applicant and his investors shall jointly appoint the Directors on the Board.

Resolution Plan will be monitored by monitoring committee.

RadhakrishnanDharmarajan (RP), S David (SBI representative), Nagabhusanam (IDBI representative), Sridhar and Hema( Corporate debtor representatives) are the members of Monitoring Committee.

Appeal with NCLAT

Aggrieved by the Order of NCLT, Chennai Saravana Global Holdings Limited and P Shobha (minority shareholders) filed an appeal to National Company Law Appellate Tribunal, New Delhi (NCLAT). NCLAT vide its order dated 28th February 2019 has passed the following

Order.:-

Until further order the monitoring committee will not handover the possession of corporate debtor to the Resolution Applicant if not yet handed over. In case the possession of the corporate debtor has been handed over the resolution applicant will maintain the status quo and will not alienate, transfer or create third party encumbrance of movable or immovable property of the corporate debtor. The concerned person will ensure that the company remains a going concern.

The case posted to further hearing on 02nd April 2019

Subsequently Mr. Mahaveer Chand Bafna (Resolution Applicant), had filed reply. Resolution Professional, COC and the Company (Corporate Debtor) were made party for hearing with Honourable NCLAT.

The case, posted to further hearings on various datesviz., 25th April 2019, 02nd May 2019 and 07th May 2019, the Honourable NCLAT instructed the resposdants to file their written submission not more than 3 pages and subsequent to the written submissions filed by Mr. Mahaveer Chand Bafna (Resolution Applicant) and parties concerned, the judgement was reserved on 09th May 2019 by NCLAT.

Conclusion:

In view of the above, the process of restructuring of assets and liabilities detailed in the Resolution plan and restatement thereof in the Accounts is being deferred to be carried out in the ensuing financial year on account of the abovementioned happenings.

4 Functional and Presentation Currency

These standalone statements are presented in Indian Rupees which is also the company''s functional currency.

All financial information presented in Indian rupees has been rounded to the nearest Lakhs with two decimals except where otherwise indicated.

5 Adoption of INDAS :

(i) Overall principle adopted in the year of first time adoption:

The Company adopted Ind AS for the first time in preparation of financial statements for the year ended march 31, 2018 by recognizing all assets and liabilities whose recognition is required by IND AS, not recognizing items of assets or liabilities which are not permitted by IND AS, by reclassifying certain items from previous GAAP to Ind AS as required under the IND AS, and applying IND AS in the measurement of recognized assets and liabilities. However, the Company had opted for certain mandatory exceptions and availed certain optional exemptions.

(ii) For the Current period:

a. Exemptions from retrospective application of IND AS :

Since the following IND ASs are not applicable to the Company, the company opts for exemption from retrospective application of the same:

IND AS Description

101 First time adoption of IND AS principles

102 Share based payment

103 Business Combination

104 Insurance contract

106 Exploration and Evaluation of mineral resources

109 Financial Instruments

111 Joint Arrangements

20 Accounting for Government grants and disclosure of government Assistance

27 Separate Financial Statements

28 Investment in Associates and Joint ventures

29 Financial reporting in Hyperinflationary economies 32 Financial Instruments: presentation

40 Investment Property

41 Agriculture

(ii) Adoption of IND ASs applicable to the Company

IND AS 2: Inventories Accounting:

Inventories are measured at the lower of cost and net realizable value. Cost comprises the fair value of consideration for the purchase and all directly attributable costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated cost necessary to make the sale.

The management has identified items of stores and spares to be restated at fair values and disposed off since these are considered no longer usable considering the approval regulations.

IND AS 7: Cash Flow Statement

Cash flows are reported using the indirect method, whereby, profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts orpayments and item of income or expenses associated with investing or financing cash flows. The cash flows are segregated into operating, investing and financing activitiesThe Company has presented all the necessary disclosures required in the prescribed format.

IND AS 8: Accounting policies, changes in Accounting estimates and Errors:

The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, the disclosures of contingent assets and contingent liabilities at the date of financial statements, income and expenses during the period. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in future periods which are affected.

The Company has not adopted a new policy nor has brought about any voluntary change to the Accounting policy.

The Company has made disclosure regarding those IND Ass which are not applicable to the Company.

IND AS 115 is a new standard which has become applicable from 1st of April 2018,and the company has disclosed the methodology adopted as well as the impact arising out of application of the standard vide clause 5 (ii) (vii).

There is no tangible change in respect of accounting estimate and there is no instance of a prior period error.to be given effect to.

IND AS 10: Events after the Reporting period:

Reference is drawn to Clause 3 above wherein there is a detailed recital of events relating to Insolvency and Bankruptcy proceedings initiated on the company since July 2018, and also NCLT order passed in favour of the Resolution proposal submitted by the promoter

Subsequently the order was stayed by NCLAT bench vide order dt.28th February 2019 due to appeal by a corporate opting to exercise their bid.

The first hearing in respect of above was held on 2nd April 2019, followed by couple of hearings wherein the appellant was given opportunity to file their offer. On 9th of May 2019, Orders were reserved.

The impact:

In case of vacation of stay against the NCLT order, implementation of the original Resolution plan submitted by the promoter would commence as a result of which the impact would be as depicted herein below:

In case of acceptance of the appellant''s request to float an Expression of interest, then the Resolution plan submitted would be null and void, and the EOI process would commence.

IND AS 12: Income Taxes

Income tax expense comprises current and deferred tax. Income tax expense is recognized in the Statement of Profit and Loss except to the extent it relates to items recognized directly in equity or in other comprehensive income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date. Minimum alternate tax (MAT) is accounted as current tax when the Company is subjected to such provisions of the Income tax act. However, credit of such MAT paid is available when the Company is subjected to tax as per normal provisions in the future. Credit on account of mat is recognized as an asset based on the management''s estimate of its recoverability in the future.

Deferred tax is recognized using the Balance Sheet method, providing for temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences:

(i) the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss

(ii) Differences relating to investments in subsidiaries and associates to the extent that it is probable that they will not reverse in the foreseeable future.

(iii) arising due to taxable temporary differences on the initial recognition of goodwill, as the same is not deductible for tax purposes.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized to the extent it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

IND AS 16: Property, Plant and Equipment:

The Company had elected to continue with the carrying amount from the year of adoption for all of its PPE, intangible asset measured as per previous GAAP and use that as deemed cost as at the date of transition, and did not have any decommissioning liability as on transition date.

Assumptions and Key Sources of estimation Uncertainty

a. Useful life of Property, Plant & equipment (PPE)

The Company has reviewed the estimated useful lives of PPE at the end of each reporting period.

Property, plant and equipment is stated at cost less accumulated depreciation and where applicable, accumulated impairment losses. Cost includes expenditure that is directly attributable to acquisition of the asset. the cost of self constructed assets includes the cost of materials, direct labour and any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognized net within "other income/other expenses" in the Statement of Profit and Loss.

Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefit embodied within the part will flow to the Company and its cost can be measured reliably. the carrying amount of the replaced part is de-recognized. the cost of day to day servicing of property, plant and equipment are recognized in Statement of Profit or Loss.

Depreciation

Depreciation is recognized in the Statement of Profit and Loss under Straight Line basis over the estimated useful lives of each part of an item of property, plant and equipment as prescribed in schedule II. Assets costing Rs.5000 or below acquired during the year considered not material and are depreciated in full retaining Re.1/- per asset. the Useful life other than that described in Schedule II adopted are furnished below.

The depreciation method, useful lives and residual value are reviewed at each of the reporting date. IND AS 17: leases

The Company has leased small portion of its Gratylon property and has disclosed the Rent received. It is only the nature of a simple lease arrangement and does not have any unusual covenants attached to it.

IND AS 19: Employee Benefits

Employee benefits are accrued in the period in which the associated services are rendered by employees of the Company, as detailed below:

a) Defined contribution plan (Provident fund)

In accordance with Indian law, eligible employees receive benefit from provident fund, which is a defined contribution plan. Both the employee and employer make monthly contributions to the plan, each equal toa specific percentage of employee''s basic salary. The Company has no further obligations under the plan beyond its monthly contributions. the Company does not have any legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee service in the current and prior periods. Obligation for contributions to the plan is recognized as an employee benefit expense in the Statement of Profit and Loss when incurred.

ii) Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan (Gratuity Plan) covering eligible employees in accordance with Indian Law. The Gratuity Plan provides for a lump sum payment to vested employees on retirement, death while employment or on termination of employment in an amount equivalent to 15days last drawn salary payable for each completed year of services. The liability for the eligible employees is determined on the basis of actuarial valuation as on the balance sheet date, using projected unit credit method and is funded with Gratuity fund managed by Life Insurance Corporation of India Ltd.

IND AS 21: Effects of change in Foreign exchange rates

The Company computes the exchange rate gains or losses arising as a result of Export sale of goods in respect of:

a. Differences in rates on account of varying dates of raising invoices and realizations thereof

b. Restating the outstanding balances from overseas parties on account of export sales effected.

c. Advance received from overseas parties, supplies yet to be effected, and balance held by company as at year end.

IND AS 23: Borrowing Costs

Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalized as part of cost of that asset. other borrowing costs are recognized as expenses in the period in which they are incurred. to the extent the Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the Company determines the amount of borrowings costs eligible for capitalization by applying a capitalization rate to the expenditure incurred on such asset. the capitalization rate is determined based on the weighted average of borrowing costs applicable to the borrowings of the Company which are outstanding during the period, other than borrowings made specifically towards purchase of qualifying asset.

The amount of borrowing costs that the Company capitalizes during a period does not exceed the amount of borrowing costs incurred during that period.

The Company does not have any instance of capitalizing borrowable cost to its assets. The Borrowing costs booked in accounts are on account of costs of utilization of minimum credit facilities extended by banks.

IND AS 33: Earnings per share

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Where ordinary shares are issued but not fully paid, they are treated in the calculation of basic earnings per share as a fraction of an ordinary share to the extent that they were entitled to participate in dividends during the period relative to a fully paid ordinary share. Diluted EPS is determined by adjusting profit or loss attributable to ordinary shareholders and the weighted average number of shares outstanding for the effects of all potential ordinary shares, which include share options granted to employee if any, to the extent that partly paid shares are not entitled to participate in dividends during the period. they are treated as equivalent of warrants or options in the calculation of diluted earnings per share

IND AS 34: Interim Financial Reporting

This Reporting should enable explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the entity since the end of the last annual reporting period. Information disclosed in relation to those events and transactions shall update the relevant information presented in the most recent annual financial report..

IND AS 36: Impairment of Assets

The carrying amount of the Company''s assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. An impairment loss is recognized if the carrying of amount an asset or its cash generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in the Statement of Profit and Loss. Impairment losses recognized in respect of cash generating unit are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit or group of units on a pro rata basis.

Reversal of impairment loss

Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. an impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. a reversal of an impairment loss is recognized immediately in the Statement of Profit and Loss.

However, owing to the recital presented in respect of the Insolvency and Bankruptcy proceedings on the Company, and its status with NCLT/NCLAT in the concluding part of Clause 3 hereinabove, effecting restatement by carrying out assessment of Fair values of each class of assets and liabilities have been deferred to the ensuing accounting period. It is proposed that once the stay on stay on the NCLT order is vacated, the fair value assessments as proposed in Resolution plan be carried out. Consequently, the exercise of recognizing impairment also has been deferred to the ensuing accounting period.

xiv: IND AS 37: Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefit will be required to settle the obligation. If the effect of the time value of money is material, provisions are discounted using acurrent pre-tax rate that reflects, where appropriate, the risk specified to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as finance cost.

A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. the provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.

Contingent liabilities are disclosed in the financial Statements by way of notes to accounts, unless possibility of an outflow of resources embodying economic benefit is remote.

Contingent assets are disclosed in the Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.

In the present scenario of NCLT/ NCLAT proceedings as detailed in Clause 3 hereinabove, it can be construed that the accounting and economic impacts of Restatements of Assets and liabilities on account of Write offs, Write backs and the Share capital reduction, etc proposed in the Resolution plan is contingent on the decision of the NCLAT.

A decision resulting In vacation of stay would enable the implementation of the promoters'' resolution plan which would result in restructuring the financial position of the company.

A decision on the other side would stall the above process, and would result in restoration of Insolvency and Bankruptcy proceedings and enable any outside bidder to propose an alternate resolution plan.

IND AS 38: Intangible Assets

Intangible assets that are acquired by the Company, which have finite useful lives are measured at cost less accumulated amortization and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the intangible asset.

Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, are recognized in the Statement of Profit and Loss.

Amortization of intangible asset with finite useful lives

Amortization is recognized in the Statement of Profit and Loss on a straight line basis over the estimated useful lives of intangible assets from the date that they are available to use based on the estimates made by the management with respect to the useful life and residual value.

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

Ind AS 105: Non-current Assets held in Discontinued operations

The Company does not have any non-current asset/disposal group to be classified as held for sale. However, since there were no operations or business conducted in the case of subsidiary, M/S Bafna Lifestyle Remedies Ltd, this was construed as "Discontinued operations" during the previous period under this standard.. The measurement of fair value in this case was deferred taking into consideration IND AS 10:"events occurring after the reporting date" whereby the management had already taken a principle decision to hive off the fixed assets and wind up the subsidiary company. Since it was recognized as "discontinued operations", exception was taken to retrospective application of deemed/notional interest on the loan to subsidiary.

During the current reporting period, the Fixed asset held in the subsidiary company was disposed off (detailed in Notes to Consolidated Financial statements) and the proceeds was used to part settle the loan outstanding to the Holding company. Owing to the proceedings of the Insolvency and Bankruptcy Code2016 initiated on the company by an operational creditor as detailed under Note no 3 :Basis of Measurement hereinabove, the decision to wind up was deferred by the Company. However, the outstanding balance of the loan from subsidiary company was written off as on 31^st March 2019 as the first step towards winding up.

Ind AS 108: Segment Reporting

The Company has only one Segment of Business i.e., Pharmaceuticals and the Financials are depicted as per INDAS requirements.

IND AS 109: Financial Instruments:

The Company is holding equity shares in its subsidiary, which have not been stated at FVOCI owing to the reasons stated in 3 (i) above i.e., since the entity is not a going and is proposed to be wound up. Hence, the company has opted to carry the value of shares at cost.

Debt held in subsidiary has been written off as explained in the same section.

IND AS 112: Disclosure of interests in other entities:

There is no other interests except for investment in Subsidiary, which is being carried at cost value as explained in III (iii) above. The loss from the entity has been taken into account in the Consolidated Financial statements.

IND AS 113: Fair Value Measurements:

This Standard requires disclosure of the following:

a. for assets and liabilities that are measured at fair value on a recurring or non recurring basis in the balance sheet after initial recognition, the valuation techniques and inputs used to develop those measurements, and

b. for recurring fair value measurements using significant unobservable inputs, effect of the measurements on profit or loss or other comprehensive income for the period.

However, owing to the recital presented in the concluding part of (3) hereinabove, restatement carrying out an assessment of Fair values of each class of assets and liabilities have been deferred to the ensuing accounting period. It is proposed that once the stay on stay on the NCLT order is vacated, restructuring process as proposed in Resolution plan be carried out.

IND AS 114: Regulatory Deferral Accounts

The Company''s operations are subject to Technical Regulatory regimes such as MHRA of UK, WHO and various licences/approvals. They are pertinent in terms of maintaining high world class standards in order to enable procurement of export orders. However, they are not exactly linked to product rates or neither is there any control factor on the prices that it would charge its customers.

Hence, there would be no direct monetary impact on the company, except for certain degree of Regulatory risks since the abstention of orders hinges on clearance of licences and approvals. There would be no impact on the rates or prices, and hence, does not require any specific disclosures.

IND AS 115: Revenue from Contract with customers:

This new contract contains principles that an entity will apply to determine the measurement of revenue and the timing of when it is recognized. The underlying principle is that the entity will recognize revenue to depict transfer of goods or services to customers at an amount the entity expects to be entitled to in exchange for these goods and services.

The Company adopts a five-step process:

Identify contract with customer: Most of these are peripherally documented with regard to quantity and rate, since the quality factor is an implied conclusion considering the strict regulatory environment which the company is subject to.

Identify separate performance obligations: This is an integral part since it is very pertinent in a product/ formulation segment in pharma sector.

Determine the transaction price : The tests that are applied in order to judge whether the company''s experience is not predictive of the outcome of the contract:-

Whether the amount of consideration is highly susceptible to factors outside the influence of the entity.

Whether there would be any uncertainty about the amount of consideration not capable of being resolved over a period of time.

Whether we have experience in handling similar type of contracts

Whether the contract has large number and broad range of deliverables and consideration amounts.

Allocate transaction price to the separate performance obligation:

The Company assesses whether there are single or multiple performance obligations and accordingly, follows 2 price estimation methods: i) Costs plus a reasonable margin ii) evaluation of stand-alone prices of similar or same product(s). The Company also prefers discounts or preferences to customer if certain conditions/ policies are met.

Recognize Revenues i.e., raising of invoices as and when the defined performance obligations are fulfilled and when the customer obtains control over the goods or services. The tests applied are: Whether: i) the customer has unconditional obligation to pay, ii) customer has legal title, iii) customer has physical possession iv) customer has the risks and rewards of ownership of the goods (v) the customer has accepted the goods.

Most of the company''s contracts begin and end with the same accounting period, and hence, the necessity for restating the contract values does not arise.

6. Critical Accounting Judgments, Assumptions and Key Sources of estimation Uncertainty

a. An asset is classified as current if:

(a) it is expected to be realized or sold or consumed in the Company''s normal operating cycle;

(b) it is held primarily for the purpose of trading;

(d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

The exception has been in the case of Receivables whereby the Management, in its judgment, has retained certain outstanding balances which are more than 12 months as current.

All other assets are classified as non-current.

A liability is classified as current if:

(a) it is expected to be settled in normal operating cycle;

(b) it is held primarily for the purpose of trading;

(d) it has no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current.

b. Financial instruments

(i) Financial assets - Investment in subsidiaries, associates and joint ventures:

a. Regarding the Company''s investments in its wholly subsidiary,Bafna Lifestyle Remedies Limited (BLRL) in the form of Equity shares, it which has controlling stakes over the entity''s affairs and it has been explained as per IND AS 112 hereinabove. The Company has opted to state the investment at Indian GAAP values, and not to adopt FVTOCI as at the reporting date.

The Company does not have any associates or Joint ventures.

(ii) Financial assets - other than investment in subsidiaries, financial assets comprises of Trade receivables, cash and cash equivalents and other financial assets like Advances to suppliers, Subsidiary company and to others.

Initial recognition:

All financial assets are recognized initially at Fair value plus transaction costs that are attributable to the Acquisition of the financial asset (In case of financial assets not recorded at FVTPL, transaction costs are recognized immediately in Statement of Profit and Loss). Purchase or sale of financial asset within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date.

Subsequent measurement:

i) Trade receivable :An impairment analysis is performed at each reporting date. the expected credit losses over lifetime of the asset are estimated by adopting the simplified approach using a provision matrix which is based on historical loss rate reflecting future economic conditions. In this approach, assets are grouped on the basis of similar credit characteristics such as industry, customer segment, past due status and other factors which are relevant to estimate the expected cash loss from these assets.

The Company, had, during the last period, effected measurements at Fair value by conducting a realistic assessment on the probability of recoverability and have recognized the impairment vide FVTPL methodology.

However, in respect of the current reporting period, due to the reasons stated in Clause 3 hereinabove: Basis of Measurement hereinabove, since the restructuring based on resolution plan submitted is stayed by NCLAT, restatement at fair values has been deferred.

ii) Other financial assets

As explained in IND AS 105 in respect of Advances to Subsidiary, M/s Bafna Lifestyle Remedies Limited, the same has been written off applying the principles of prudence since the subsidiary is no longer a going concern.

Derecognition on financial asset

Financial assets are derecognized when the contractual right to cash flows from the financial asset expire or the financial asset is transferred and the transfer qualifies for Derecognition. On Derecognition of a financial asset in its entirety, the difference between the carrying amount (measured at the date of Derecognition) and the consideration received (including any new asset obtained less any new liability assumed) shall be recognized in the Statement of Profit and Loss.

c. Financial liabilities

Initial recognition and measurement

Financial liabilities are initially recognized at fair value plus any transaction cost that are attributable tothe acquisition of financial liability except financial liabilities at fair value through profit and loss which are initially measured at fair value.

Subsequent measurement

The financial liabilities are classified for subsequent measurement into following categories

- at amortized cost

- at fair value through the Statement of Profit and Loss Financial liabilities at amortized cost

the Company is classifying the following under amortized cost;

a) Borrowings from banks

b) Borrowings from others

c) trade payables

d) other financial Liabilties

Amortized cost for financial liabilities represents amount at which financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative Amortization using the effective interest method of any difference between that initial amount and the maturity amount.

Financial liability at Fair Value through Statement of Profit and Loss

There are no financial liabilities of the Company that held for trading purposes.

De-recognition of financial liabilities

A financial liability is de-recognized when and only when, it is extinguished i.e. when the obligation specified in the contract is discharged or cancelled or expires.

Derivative financial instruments

The Company does not have any foreign exchange forward contracts and options, and neither has the company designated any hedge instruments.

Offsetting of financial assets and liabilities

Financial assets and liabilities are offset and the net amount is presented in Balance Sheet when, and only when, the Company has a legal right to offset the recognized amounts and intends either to settle on a net basis or to realize the assets and settle the liability simultaneously.

Reclassification of financial assets

The Company does not restate any previously recognized gains, losses (including impairment gains or losses) or interest.

d. Share capital

Equity Shares are classified as equity. Where any shares are issued, incremental costs directly attributable to the issue of new equity shares or share options will be recognized as deduction from equity, net of any tax effects.

7. Financial risk management

The company has exposure to the following risks from its use of financial instruments.

7.1 Credit risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable. Based on such evaluations, the Company has retained outstanding balances of certain parties the age of which is beyond one year after the process of carrying out impairment.

7.2 Liquidity risk : The Company manages liquidity risk by reasonably monitoring forecast and actual cash flows.

7.3 Market risk

Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of a business. the major components of market risk are commodity price risk, foreign currency exchange risk and interest rate risk.

7.4 Commodity price risk - the primary commodity price risks that the Company is exposed to include API prices that could adversely affect the value of the Company''s financial assets or expected future cash

7.5 Foreign currency risk management - The Company makes export sales to countries outside India. the Company is, therefore, exposed to foreign currency risk principally arising out of foreign currency movement against the Indian Currency.

The carrying amounts of the Company''s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows.

7.6 Foreign currency sensitivity analysis the Company is principally exposed to foreign currency risk against USD, Euro and GBP

7.7 Interest rate risk management

The Company is exposed to interest rate risk because of borrowable of short term funds at floating interest rates. The Management, considering the current status, considers it apt not to dwell on any sensitivity analysis or conduct any tests of risk analysis since it is in the process of carrying out a restructuring exercise.

8. Capital Management

The Company''s capital comprises of equity share capital, retained earnings and other equity attributable to equity holders. the primary objective of company''s capital management is to maximise shareholders value.

9. Legal proceedings / Contingent Liabilities / Contingent Assets

The Legal position in respect of NCLT proceedings has been detailed in Clause 3 : Basis of Measurement herein above.

10. Dues to micro and small enterprises

The Company has not received any letter from any vendor claiming their status as micro/small enterprises, accordingly the amount paid/payable to these parties is considered to be nil.

17. Contribution to Corporate Social Responsibilities

Sec 135 of Companies act 2013, requires Company to spend towards Corporate Social responsibility, which however is not applicable to this Company.

Mar 31, 2016

Notes to the accounts of M/s Bafna Pharmaceuticals Ltd for the year ended on 31^st march 2016

SIGNIFICANT ACCOUNTING POLICIES

1. Corporate Information

Bafna Pharmaceuticals Limited (The Company) is a Public Limited Company domiciled in India and incorporated under the provisions of the Companies Act 1956. Its Shares are listed in Bombay Stock Exchange and National Stock Exchange in India. The Company is engaged in the manufacture of drugs and medicines. The Company has also got an excellent Research and Development Facility for life saving drugs. The Company caters to both domestic and international markets.

The financial statements have been prepared in accordance with generally accepted accounting in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the Accounting Standards as notified by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 2013. The financial Statements have been prepared under the historical cost convention on an accrual basis except in case of Land (freehold and leasehold).

2. Summary of significant Accounting policies

a. Basis of Accounting

The financial statements of the company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act")/ Companies Act, 1956 ("the 1956 Act"), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except for change in the accounting policy for depreciation.

All assets and liabilities have been classified as current or noncurrent as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. The Company''s activities in its business segments have operating cycles which do not exceed 12 months. As a result, current assets comprise elements that are expected to be realized within 12 months after the reporting date and current liabilities comprise elements that are due for settlement within 12 months after the reporting date.

b. Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make 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. Although these estimates are based upon the management''s best knowledge of current events and actions, actual results could differ from these estimates. Uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

c. Tangible fixed assets

Tangible fixed assets, acquired by the company are reported at acquisition cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalized criteria are met and directly attributable cost or bringing the assets to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to an item of fixed assets is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

The company adjusts exchange differences arising on transaction/settlement of long term foreign currency monetary items pertaining to the acquisition of a depreciation asset to the cost of the asset and depreciates the same over the remaining life of the asset.

d. Depreciation on tangible assets

Depreciation on fixed assets is calculated on written down value (WDV) method on the plant & machinery situated at Madhavaram units and straight line method is charges only to the Grantlyon unit using the rates arrived at based on the useful lives estimated by the management or those prescribed under the PART C of the Schedule II to the Companies Act, 2013.

Depreciation for additions to / deletions from owned assets is calculated on pro-rata from/to the day of addition /deletion.

e. Intangible assets

Intangible assets are tested for impairment on an annual basis. These generally include cost of Developed products, in process R&D and Customer relationships. Costs incurred for applying research results or other knowledge to develop new products is capitalized to the extent that these products are expected to generate future financial benefits. In case of In-process R&D, amortization will begin when product is approved and launched.

Intangible assets are reported at acquisition value with deduction for accumulated amortization and any impairment losses. Amortization take place on a straight line basis over the assets anticipated useful life. The useful life is determined based on the period of the underlying contract and the period of time over which the intangible assets is expected o be used and generally does not exceed 10years.

The estimated useful life of each major category of intangible assets is as follow

Assets	Estimated useful life
Customers Relationships	5years
Developed Products	5years
Brand & Trade Marks	10years

f. Borrowing costs

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange difference from foreign borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attribute to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

g. Investments

Long term investments are valued at cost. The investment are made in subsidiary company i.e. M/s Bafna Lifestyle Remedies Ltd and in M/s. Strides Health Care Pvt. Limited.

h. Inventories

Raw materials, components, store and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis

Work in progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the site.

i. Scrap Generation & Disposal

The scrap generated during the production process is being destroyed in the presence of Competent Authorities, and no scrap other then production process scrap is being generated in the company. Empty Containers of Raw Material purchased from the vendors are being used in the factory itself or disposed off otherwise.

j. Revenue Recognition

Revenue from sale of products is recognized when practically all obligations connected with the transaction risks and rights to the buyer have been fulfilled and excluded sales tax and state value added taxes. This usually occurs upon dispatch and collection of the receivable is reasonably certain.

Interest income is recognized using time proportion method based on the rates implicit in the transaction.

k. Foreign Currency Transactions

Transactions in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange difference arising on settlement thereof during the year is recognized as income or expenses in the Profit and Loss Account.

Monetary assets and liabilities denominated in foreign currency are restated at the rates of exchange as on the Balance Sheet and the exchanges/gain loss is suitably dealt with in the Profit & Loss Account

l. Employee Benefits

Liability for employee benefits, both short and long term, which are due as per the terms of employment, are recorded in accordance with Accounting Standard -15(Revised) "Employee Benefits" notified by the Companies (Accounting Standards) Rules,2006.

m. Gratuity

BPL has an obligation towards gratuity, a defined benefit retirement plan (Gratuity Plan) covering eligible employees in accordance with Indian Law. The Gratuity Plan provides for a lump sum payment to vested employees on retirement, death while employment or on termination of employment in an amount equivalent to 15 days last drawn salary payable for each completed year of services. The liability for the eligible employees is determined on the basis of actuarial valuation as on the balance sheet date, using projected unit credit method and is funded with Gratuity fund managed by Life Insurance Corporation of India Ltd.

n. Income Taxes Current Tax

Current tax is determined in accordance with the provisions of Income Tax Act, 1961.

Company has not paid the Income Tax dues for the Financial Year 2015-16. The total amount which is standing payable to the tune of Rs. 4,46,74,037/- approximately including interest as on date of signing the balance sheet.

Deferred Tax

Deferred tax is calculated at the tax rates and laws that have been enacted or substantively enacted as of the Balance Sheet date and is recognized on timing difference that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence are recognized and carried forward only to the extent they can be realized.

The carrying amount of deferred tax assets is reviewed at each Balance Sheet date and reduced by the extent that is no longer probable that sufficient taxable profit will be available to allow all or a part of the aggregate deferred tax to be utilized.

o. Segment reporting

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. The company primarily operates in single business segment which is generic pharmaceutical, and accordingly there are no primary segments to be reported as per Accounting Standard 17 "Segment Reporting".

p. Earnings per share

The basic earnings per equity share is computed by dividing the net profit or loss for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the reporting period . The number of shares used in computing diluted earnings per share and also the weighted average number of shares considered for deriving basic earnings per share which may be issued on the conversion of all dilutive potential shares, unless the results would be anti-dilutive. ''

q. Impairment of Assets

In the Opinion of the Company, the recoverable amount of the fixed assets of the company will not be lower than book value of the fixed assets. Hence no provision has been made for Impairment.

r. Foreign Currency Transactions

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency on the date of the transaction.

Conversion

Foreign currency monetary items are reported using the closing rate. Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

Exchange Difference

Exchange differences arising on the settlement of monetary items or on reporting company''s monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

s. Custom & Excise Duty

Excise Duty on finished goods lying at the factory is accounted at point of sale or dispatch. Custom Duty on imported material lying in bonded warehouse is accounted for at the time of bonding materials.

t. Provisions

A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Mar 31, 2015

A. Basis of Accounting

The financial statements of the company have been prepared in accordance with the Generally Accepted Accounting Principles in India ( Indian GAAP) to comply with the Accounting Standards specified under section 133 of the CompaniesAct,2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act.,2013 ("the 2013Act")/ Companies Act,1956 ("the 1956Act"), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except for change in the accounting policy for depreciation.

All assets and liabilities have been classified as current or noncurrent as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act,2013. The Company's activities in its business segments have operating cycles which do not exceed 12 months. As a result, current assets comprise elements that are expected to be realized within 12 months after the reporting date and current liabilities comprise elements that are due for settlement within 12 months after the reporting date.

b. Use of estimates.

The preparation of financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contigent liabilities, at the end of the reporting period. Although these estimates are based upon the management's best knowledge of current events and actions, actual results could differ from these estimates. Uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

c. Tangible fixed assets.

accumulated impairment losses, If any. The cost comprises purchase price, borrowing costs if capitalized criteria are met and directly attributable cost or bringing the assets to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to an item of fixed assets is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

The company adjusts exchange differences arising on transaction/settlement of long term foreign currency monetary items pertaining to the acquisition of a depreciation asset to the cost of the asset and depreciates the same over the remaining life of the asset.

d. Depreciation on tangible assets

Depreciation on fixed assets is calculated on written down value (WDV) method on the plant & machinery situated at Madhavaram units and straight line method is charges only to the Grantlyon unit using the rates arrived at based on the useful lives estimated by the management or those prescribed under the PART C of the Schedule II to the Companies Act, 2013.

Depreciation for additions to / deletions from owned assets is calculated on pro rata from / to the day of addition /deletion.

e. Intangible assets

Intangible assets are tested for impairment on an annual basis. These generally include cost of Developed products, In process R&D and Customer relationships. Costs incurred for applying research results or other knowledge to develop new products is capitalized to the extent that these products are expected to generate future financial benefits. In case of In process R&D, amortization will begin when product is approved and launched.

Intangible assets are reported at acquisition value with deduction for accumulated amortization and any impairment losses. Amortization take place on a straight line basis over the assets anticipated useful life. The useful life is determined based on the period of the underlying contract and the period of time over which the intangible assets is expected o be used and generally does not exceed 10years.

The estimated useful life of each major category of intangible assets is as follow

Assets Estimated useful life

Customers Relationships 5years

Developed Products 5years

Brand 10years

Borrowing costs

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange difference from foreign borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attribute to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

f. Investments

Long term investments are valued at cost. The investment are made in subsidiary company ie., M/s Bafna Life Style Remedies Ltd and in M/s. Strides Health care Pvt Limited.

g. Inventories

Raw materials, components, store and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis.

Work in progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the site.

h. Revenue Recognition

Revenue from sale of products is recognized when practically all obligation connected with the transaction risks and rights to the buyer have been fulfilled and excluded sales tax and state value added taxes. This usually occurs upon dispatch and collection of the receivable is reasonably certain.

Interest income is recognized using time proportion method based on the rates implicit in the transaction.

i. Foreign Currency Transactions

Transaction in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange difference arising on settlement thereof during the year are recognized as income or expenses in the Profit and Loss Account.

Monetary assets and liabilities denominated in foreign currency are restated at the rates of exchange as on the Balance Sheet and the exchanges/gain loss is suitably dealt with in the Profit & Loss Account

j. Employee Benefits

Liability for employee benefits, both short and long term, which are due as per the terms of employment, are recorded in accordance with Accounting Standard -15(Revised) "Employee Benefits" notified by the Companies (Accounting Standards) Rules,2006.

k. Gratuity

BPL has an obligation towards gratuity, a defined benefit retirement plan (Gratuity Plan) covering eligible employees in accordance with Indian Law. The Gratuity Plan provides for a lump sum payment to vested employees on retirement, death while employment or on termination of employment in an amount equivalent to 15days last drawn salary payable for each completed year of services. The liability for the eligible employees is determined on the basis of actuarial valuation as on the balance sheet date, using projected unit credit method and is funded with Gratuity fund managed by Life Insurance Corporation of India Ltd.

l. Income Taxes

Current Tax

Current tax is determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax

Deferred tax is calculated at the tax rates and laws that have been enacted or substantively enacted as of the Balance Sheet date and is recognized on timing difference that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence are recognized and carried forward only to the extent they can be realized.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced by the extent that is no longer probable that sufficient taxable profit will be available to allow all or a part of the aggregate deferred tax to be utilized.

m. Segment reporting

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. The company primarily operates in single business segment which is generic pharmaceutical, and accordingly there are no primary segments to be reported as per Accounting Standard 17 "Segment Reporting".

n. Earning per share

The basic earnings per equity share is computed by dividing the net profit or loss for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share and also the weighted average number of shares considered for deriving basic earnings per share which may be issued on the conversion of all dilutive potential shares, unless the results would be anti-dilutive. '

o. Impairment of Assets

In the Opinion of the Company, the recoverable amount of the fixed assets of the company will not be lower than book value of the fixed assets. Hence no provision has been made for Impairment.

p. Foreign currency transactions

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency on the date of the transaction.

Conversion

Foreign currency monetary items are reported using the closing rate. Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

Exchange Difference

Exchange differences arising on the settlement of monetary items or on reporting company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

q. Custom & Excise Duty

Excise Duty on finished goods lying at the factory is accounted at point of sale or dispatch. Custom Duty on imported material lying in bonded warehouse is accounted for at the time of bonding materials.

r. Provisions

A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the final statement.

s. Cash and cash equivalents

Cash and cash equivalents for the purpose of cash flow statement comprises cash at bank and in hand and short-term investments with an original maturity of three months or less.

t. Research and Development Expenditure

Capital Expenditure is included in Fixed Assets & Capital Work in Progress and depreciation is provided at the respective applicable rates.

Revenue expenditure is charged off in the year in which they are incurred and are included with the respective nature of account heads in the profit and loss account statement.

Mar 31, 2014

A. Change in Presentation of financial statement:

During the year ended 31st March 2012, the revised schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of its financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirement applicable in the current year.

b. Use of estimates.

The preparation of financial statements in conformity with Indian GAAP requires the 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. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

c. Tangible fixed assets.

Fixed assets, acquired are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalized criteria are met and directly attributable cost or bringing the assets to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price. Subsequent expenditure related to an item of fixed assets is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

The company adjusts exchange differences arising on transaction/settlement of long term foreign currency monetary items pertaining to the acquisition of a depreciation asset to the cost of the asset and depreciates the same over the remaining life of the asset.

d. Depreciation on tangible assets

Depreciation on fixed assets is calculated on written down value (WDV) method on the plant & machinery situated at Madhavaram units and straight line method is charges only to the Grantlyon unit using the rates arrived at based on the useful lives estimated by the management or those prescribed under the Schedule XIV to the Companies Act, 1956.

Depreciation for additions to / deletions from owned assets is calculated on pro rata from / to the day of addition /deletion.

e. Intangible assets

Intangible assets are tested for impairment on an annual basis. These generally include cost of Developed products, In process R&D and Customer relationships. Costs incurred for applying research results or other knowledge to develop new products is capitalized to the extent that these products are expected to generate future financial benefits. In case of In process R&D, amortization will begin when product is approved and launched.

Intangible assets are reported at acquisition value with deduction for accumulated amortization and any impairment losses. Amortization take place on a straight line basis over the assets anticipated useful life. The useful life is determined based on the period of the underlying contract and the period of time over which the intangible assets is expected o be used and generally does not exceed 10 years.

The estimated useful life of each major category of intangible assets is as follow

Assets Estimated useful life

Customers Relationships 5 years

Developed Products 5 years

Brand & Trade Marks 10 years

f. Borrowing costs

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange difference from foreign borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attribute to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

g. Investments

Long term investments are valued at cost. The investment are made only in subsidiary company i.e., M/s Bafna Life Style Remedies Ltd

h. Inventories

Raw materials, components, store and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis. Work in progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the site.

i. Revenue Recognition

Revenue from sale of products is recognized when practically all obligation connected with the transaction risks and rights to the buyer have been fulfilled and excluded sales tax and state value added taxes. This usually occurs upon dispatch and collection of the receivable is reasonably certain. Interest income is recognized using time proportion method based on the rates implicit in the transaction.

j. Foreign Currency Transactions

Transaction in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange difference arising on settlement thereof during the year are recognized as income or expenses in the Profit and Loss Account. Monetary assets and liabilities denominated in foreign currency are restated at the rates of exchange as on the Balance Sheet and the exchanges/gain loss is suitably dealt with in the Profit & Loss Account.

k. Employee Benefits

Liability for employee benefits, both short and long term, which are due as per the terms of employment, are recorded in accordance with Accounting Standard -15 (Revised) "Employee Benefits" notified by the Companies (Accounting Standards) Rules, 2006.

l. Gratuity

BPL has an obligation towards gratuity, a defined benefit retirement plan (Gratuity Plan) covering eligible employees in accordance with Indian Law. The Gratuity Plan provides for a lump sum payment to vested employees on retirement, death while employment or on termination of employment in an amount equivalent to 15 days last drawn salary payable for each completed year of services. The liability for the eligible employees is determined on the basis of actuarial valuation as on the balance sheet date, using projected unit credit method and is funded with Gratuity fund managed by Life Insurance Corporation of India Ltd.

m. Income Taxes

Current Tax

Current tax is determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Taxes

Deferred tax is calculated at the tax rates and laws that have been enacted or substantively enacted as of the Balance Sheet date and is recognized on timing difference that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence are recognized and carried forward only to the extent they can be realized.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced by the extent that is no longer probable that sufficient taxable profit will be available to allow all or a part of the aggregate deferred tax to be utilized.

n. Segment reporting

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. The company primarily operates in single business segment which is generic pharmaceutical, and accordingly there are no primary segments to be reported as per Accounting Standard 17 "Segment Reporting".

o. Earnings per share

The basic earnings per equity share is computed by dividing the net profit or loss for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share and also the weighted average number of shares considered for deriving basic earnings per share which may be issued on the conversion of all dilutive potential shares, unless the results would be anti-dilutive.

p. Impairment of Assets

In the Opinion of the Company, the recoverable amount of the fixed assets of the company will not be lower than book value of the fixed assets. Hence no provision has been made for Impairment.

Mar 31, 2012

A. Change in Presentation of financial statement:

During the year ended 31st March, 2012 the revised schedule VI notified under the Companies Act, 1956, has become applicable to the company, for preparation and presentation of its financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirement applicable in the current year.

b. Use of estimates:

The preparation of financial statements in conformity with Indian GAAP requires the 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. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

c. Tangible fixed assets:

Fixed assets, acquired are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalized criteria are met and directly attributable cost or bringing the assets to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to an item of fixed assets is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

The company adjusts exchange differences arising on transaction/settlement of long term foreign currency monetary items pertaining to the acquisition of a depreciation asset to the cost of the asset and depreciates the same over the remaining life of the asset.

d. Depreciation on tangible assets:

Depreciation on fixed assets is calculated on written down value (WDV) method on the plant & machinery situated at Madhavaram unit and straight line method is charged only to the Grantlyon unit using the rates arrived at based on the useful lives estimated by the management or those prescribed under the Schedule XIV to the Companies Act, 1956.

Depreciation for additions to / deletions from owned assets is calculated on prorata from / to the day of addition /deletion.

e. Intangible assets:

Intangible assets are tested for impairment on an annual basis. These generally include cost of Developed products, in process R&D and Customer relationships. Costs incurred for applying research results or other knowledge to develop new products is capitalized to the extent that these products are expected to generate future financial benefits. In case of in process R&D, amortization will begin when product is approved and launched.

Intangible assets are requested at acquisition value with deduction for accumulated amortization and any impairment losses. Amortization take place on a straight line basis over the assets anticipated useful life. The useful life is determined based on the period of the underlying contract and the period of time over which the intangible assets is expected to be used and generally does not exceeds 10 years.

f. Borrowing costs:

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange difference from foreign borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attribute to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

g. Investments:

Long term investments are valued at cost. The investment is made only in subsidiary company i.e., M/s Bafna Life Style Remedies Ltd

h. Inventories:

Raw materials, components, store and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis.

Work in progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the site.

i. Revenue Recognition:

Revenue from sale of products is recognized when practically all obligation connected with the transaction risks and rights to the buyer have been fulfilled and excluded sales tax and state value added taxes. This usually occurs upon dispatch and collection of the receivable is reasonably certain.

Interest income is recognized using time proportion method based on the rates implicit in the transaction.

j. Foreign Currency Transactions:

Transaction in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange difference arising on settlement thereof during the year are recognized as income or expenses in the Profit and Loss Account.

Monetary assets and liabilities denominated in foreign currency are restated at the rates of exchange as on the Balance Sheet and the exchange/gain loss is suitably dealt with in the Profit & Loss Account.

k. Employee Benefits:

Liability for employee benefits, both short and long term, which are due as per the terms of employment, are recorded in accordance with Accounting Standard -15(Revised) "Employee Benefits" notified by the Companies (Accounting Standards) Rules, 2006.

l. Gratuity:

Bafna Pharmaceuticals Limited has an obligation towards gratuity, a defined benefit retirement plan (Gratuity Plan) covering eligible employees in accordance with Indian Law. The Gratuity Plan provides for a lump sum payment to vested employees on retirement, death while employment or on termination of employment in an amount equivalent to 15 days last drawn salary payable for each

completed year of service. The liability for the eligible employees is determined on the basis of actuarial valuation as on the balance sheet date, using projected unit credit method and is funded with Gratuity fund managed by Life Insurance Corporation of India Ltd.

m. Income Taxes:

Current Tax:

Current tax is determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Taxes:

Deferred tax is calculated at the tax rates and laws that have been enacted or substantively enacted as on the Balance Sheet date and is recognized on timing difference that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence are recognized and carried forward only to the extent they can be realized.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced by the extent that is no longer probable that sufficient taxable profit will be available to allow all or a part of the aggregate deferred tax to be utilized.

n. Segment reporting:

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. The company primarily operates in single business segment which is generic pharmaceutical, and accordingly there are no primary segments to be reported as per Accounting Standard 17 "Segment Reporting".

o. Earnings per share:

The basic earnings per equity share is computed by dividing the net profit or loss for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share and also the weighted average number of shares considered for deriving basic earnings per share which may be issued on the conversion of all dilutive potential shares, unless the results would be anti-dilutive.

p. Impairment of assets:

In the opinion of the Company, the recoverable amount of the fixed assets of the company will not be lower than the book value of the fixed assets. Hence no provision has been made for impairment.

Mar 31, 2011

1. BASIS OF ACCOUNTING

a) The Company maintains its accounts on accrual basis following the historical cost convention in accordance with Generally Accepted Accounting Principles (GAAP) and in compliance with the Accounting Standards referred in section 211(3C) of the Companies Act, 1956.

b) The preparation of financial statements in conformity with GAAP requires that management of the company makes the estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of date of the financial statements. Example of such estimates include useful life of the fixed assets and intangible assets, provision for doubtful debts / advances, future obligations in respect of retirement plans etc. Actual results could differ from these estimates.

2. SHARE CAPITAL & SHARE WARRANTS

(i) The 15,00,000 Equity Shares have been allotted to Strategic Investors on 17th March, 2011 of the face value of Rs.10/- each at a premium of Rs.37.30/- per share aggregating to Rs.7,09,50,000/-. The said issue of shares resulted in decrease in Promoters holding from 49.40% in December, 2010 to 41.17% in March, 2011. Earning per share has been calculated considering the increase in Equity Share Capital due to the issue of above said shares during the year.

(ii) 23,18,000 Share Warrants have been allotted to Promoters & Strategic Investors on 17th March, 2011 convertible into equal number of Equity Shares of face value of Rs.10/- each including the premium of RS.37.30/-. For the aforesaid Share Warrants, the allottee has already paid 25% of the Share Warrant Price of 11.83/- per Warrant aggregating to Rs.27410350/-. For the aforesaid Warrants right to exercise conversion option is available within 18 months from the date of allotment of Warrants.

(iii) According to the information and explanations given to us and on the basis of the records examined by us, price for the aforesaid allotment of shares & warrants is not prejudicial to the interest of the Company.

3. REVENUE RECOGNITION:

a) Revenue is recognized based on the nature of activity when consideration can be reasonably measured and there exists reasonable certainty of its recovery.

b) Revenue from sale of good s is recognized when the substantial risks and rewards of ownership is transferred to buyer under the terms of contract.

c) The Interest income is recognized on accrual basis.

d) Duty draw back claimed by the Company on account of Export Sales is shown as Export Incentive.

e) Sales either Domestic or Export are shown net of Excise duty.

4. EMPLOYEE RETIREMENT BENEFIT:

a) The company is contributing to provident fund as per law and rules applicable, which is charged to revenue.

b) Payment of gratuity is applicable to the company. However no provision has been made in the books of account. Gratuity shall be accounted on cash basis whenever it is paid.

c) Provision for leave encashment is made on the basis of company's rules and regulation.

5. DEPRECIATION

a) Depreciation on all assets is provided on written down value (WDV) method as provided in Schedule XIV of the Companies Act, 1956 less accumulated depreciation.

b) Depreciation for additions to / deductions from owned assets is calculated prorate from / to the day of addition / deduction.

c) Pre-operative expenses amounting to Rs.106,329,572/- up to 30th June 2008 have been capitalized to the total value of assets in respect of Grantlyon unit and depreciation for this unit has been calculated on Straight Line Method as provided in Schedule XIV of the Companies Act,1956.

d) Depreciation for additions to / deletions from owned assets is calculated pro- rata from/to the day of addition /deletion.

e) Work on Research & Development unit though inaugurated is under progress and amount is spend till 31.03.2011 Rs.13,66,32,331/- on Research and Development including Machinery and Building Expenses there on.

6. INTANGIBLE ASSETS AND AMORTISATION:

a) Product Registration charges: The Company has not written off the Product Registration Charges incurred during the year since, the business did not commenced business in the product registered Area It was explained to us that the product registration charges will be written off in the ensuing year..

b) Share Issue Expenses: The company has spent Rs.25,135,460/- and amortized over a period of five years. As Such Rs.5,027,092/- was written off during the year.

c) The company is spend Rs.64,62,823/- on Brand Building in International Market and showing on work-in-progress.

d) A Sum of Rs.12,386,196/- of Interest of Term Loan and Salary was Capitalized and included in Work In Progress of R& D Facility.

BORROWING COST

a) The Company has got Term Loan for Setting Up of R& D facility and Paid Rs.71,24,831/- as Interest till 31st March 2011.

7. VALUATION OF INVENTORIES:

Raw Material At Cost (FIFO Method)

Work in Process At Cost

Finished goods At Cost or Market Price whichever is lower

Packing Material At cost (FIFO Method)

8. INCOME TAX AND DEFERRED TAX:

a) The Company has calculated its tax liability after considering Minimum Alternative Tax (MAT).The MAT liability can be carried forward and set off against the future tax liability. The tax provision (MAT) for the year ended 31st march 2011 is made for Rs.NIL (Previous Year Rs. 43,43,155/-).

b) Provision for Current tax is made for Rs.78,00,000/- after consideration of benefits admissible under Section 115JAA of the Income Tax Act,1961.

c) Deferred tax resulting from timing differences between taxable and accounting income is accounted for using the rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The Deferred Tax Asset and Liability is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future. Deferred Tax liability provided during the year is Rs.60,96,573/- (Previous Year Rs.97,98,234/-).

9. FOREIGN CURRENCY TRANSACTION:

a) Income of foreign currency transaction is recorded at the rate of exchange prevailing on the date when the relevant transaction has taken place. Realised gains or losses on the exchange transactions Rs.20,04,382/- are recognized in the Profit & Loss account.

Mar 31, 2010

1. Basis of Accounting:

a. The Company maintains its accounts on accrual basis following the historical cost convention in accordance with Generally Accepted Accounting Principles (GAAP) and in compliance with the Accounting Standards referred in section 211(3C) of the Companies Act, 1956.

b. The preparation of financial statements in conformity with GAAP requires that management of the company makes the estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of date of the financial statements. Example of such estimates include useful life of the fixed assets and intangible assets, provision for doubtful debts / advances, future obligations in respect of retirement plans etc. Actual results could differ from these estimates*

2- Revenue Recognition:

a. Revenue is recognized based on the nature of activity, where consideration can be reasonably measured and there exists reasonable certainty of its recovery.

b. Revenue from sale of goods is recognized when the substantial risks and rewards of ownership is transferred to buyer under the terms of contract. & The Interest income is recognized on accrual basis.

d. Duty draw back claimed by the Company on account of Export Sales is shown as Export Incentive. Sales either Domestic or Export are shown net of Excise duty.

3. Employment Retirement Benefit:

a. The company is contributing to provident fund as per law and rules applicable, which is charged to revenue.

b. Payment of gratuity is applicable to the company. However, no provision has been made in the books of account. Gratuity shall be accounted on cash basis whenever it is paid.

c Provision for leave encashment is made on the basis of companys rules and regulation.

4. Depreciation

a. Depreciation on all assets situated at Madhavaram Factory is provided on Written Down Value (WDV} method as provided in Schedule XIV of the Companies Act, 1956 less accumulated depreciation.

b. Depreciation for additions to / deductions from owned assets is calculated prorata from / to the day of addition / deduction.

c. Depreciation for Grantlyon unit has been calculated on Straight Line Method (SLM) as provided in Schedule XIV of the Companies Act, 1956.

d. Depreciation for additions to / deletions from owned assets is calculated pro-rata from / to the day of addition /deletion.

e. Work on Research & Development unit is under progress and amount spent till 31,03.2010 is Rs.63,912,376/- on building and machinery.

5* Intangible Assets And Amortisation:

a. Product Registration charges: The Company registers its products in other countries. Expenses are amortized over a period of 5 years. Hence the 1/5th of Registration charges are written off during the year. b- Share Issue Expenses: The Company has spent Rs.25,135,460/- and amortized over a period of five years.

As such Rs.5,027,092 /- was written off during the year c. The company has spent Rs. 6,462,823/- on brand building in international market and has shown the amounts under Loans and Advances d. A sum of Rs, 2,184,222/- of interest on term loan was capitalised and included in work in progress of R& D facility

Borrowing Cost

a. Company has got term loan for setting up of R & D facility and paid Rs.2,184,222/- as interest till 31sl March 2010, The amount of interest has capitalised and shown as work in progress of R & D facility,

6. Valuation of Inventories:

Raw Material: At Cost (FIFO Method)

Work in Process; At Cost

Finished goods: At Cost or Market Price whichever is lower

Packing Material: At cost (FIFO Method)

7- Income Tax and Deferred Tax:

a. The Company has calculated its tax liability after considering Minimum Alternative Tax (MAT). The MAT liability can be carried forward and set off against the future tax liability- The tax provision (MAT) for the year ended 31st March 2010 is made for Rs.5,040,000/- (Previous Year Rs.2,830,495/-)

b. Provision for Current tax is made after consideration of benefits admissible under the provision of the Income Tax Act, 1961, Deferred tax resulting from timing differences between taxable and accounting income is accounted for using the rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The Deferred Tax Asset and Liability is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future. Deferred Tax liability provided during the year is Rs,9,798,234/-,

8, Foreign Currency Transaction:

a. Income of foreign currency transaction is recorded at the rate of exchange prevailing on the date when the relevant transaction has taken place. Realised gains on the exchange transactions Rs.1,109,051/- are recognized in the Profit & Loss account,

9. Contingent Liabilities Not Provided For:

a. In respect of Letter of Credit and Bank Guarantee Rs.31,577,447/- {previous year Rs.21,237,544/-)

b. Bonds have been executed in favour of customs authorities for Rs.42,000,000/- for the purchase of materials and capital goods without payment of duty- (Previous year Rs.42,000,000/-).

12. Miscellaneous Expenses:

a. Preliminary expenses Rs.5,187,192/- writtenoff during the year (Previous year Rs.5,187,192/-}

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