Notes to Accounts of Brooks Laboratories Ltd.

Mar 31, 2018

Note 1 Corporate Information

Brooks Laboratories Limited is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 and was incorporated on 23rd January, 2002. The shares of the company are listed on BSE & NSE in India. The Company has manufacturing plants at Baddi, Himachal Pradesh and Vadodara, Gujarat. The Company is a pharmaceutical manufacturing company working on contract basis.

The financial statements of the Company for the year ended March 31, 2018 were authorised for issue in accordance with resolution of the Board of Directors on May 29, 2018

NOTE 2.1 : FIRST TIME ADOPTION OF IND AS

These are Company’s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 2.1 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS balance sheet as at April 1, 2016 (The Company’s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with accounting standards notified under Companies(Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP).An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes :

A) Exemptions and exceptions availed

1) Ind-AS optional exemptions :

Ind AS 101 allows first time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

a) Deemed cost

Ind AS 101 permits a first time adopter to elect to fair value of its property, plant and equipment as recognised in financial statements as at the date of transition to Ind AS, measured as per previous GAAP and use that as its deemed cost as at the date of transition or apply principles of Ind AS retrospectively. Ind AS 101 also permits the first time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS.

The company has elected to measure items of property plant & equipment at its carrying value at the transition date except for certain class of assets which are measured at Fair value as deemed cost.

b) For financial instruments, wherein fair market values are not available (viz. interest free and below market rate security deposits or loans) the Company has elected to adopt fair value recognition prospectively to transactions entered after the date of transition.

2) Ind AS mandatory exceptions :

a) Estimates

An entity estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates at April 1, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP.

Impairment of financial assets based on expected credit loss model.

b) Derecognition of financial assets and financial liabilities

Ind AS 101 requires a first time adopter to apply the derecognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. Accordingly,the Company has applied the derecognition requirement for financial assets and financial liabilities in Ind AS 109 prospectively for transactions occurring on or after date of transition to Ind AS.

c) Classification of financial assets and liabilities

Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of facts and circumstances that exist on the date of transition to Ind AS. Accordingly, the Company has applied the above requirement prospectively.Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable. Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.

d) Impairment of financial assets

Ind AS 101 requires an entity to assess and determine the impairment allowance on financial assets as per Ind AS 109 using the reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments which were initially recognised and compare that to the credit risk at the date of transition to Ind AS. The Company has applied this exception prospectively.

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from previous GAAP to Ind AS in accordance with Ind As 101:

I. Reconciliation of Balance sheet as at April 1, 2016 and March 31, 2017

II. Reconciliation of Total Comprehensive Income for the year ended March 31, 2017

III. Reconciliation of Equity as at April 1, 2016 and March 31, 2017 between previous GAAP and IND AS

The presentation requirements under Previous GAAP differs from Ind AS and hence Previous GAAP information has been regrouped for ease of reconciliation with Ind AS. The Regrouped Previous GAAP information is derived from the Financial Statements of the Company prepared in accordance with Previous GAAP.

Footnotes to the reconciliation of equity as at April 1, 2016 & March 31, 2017 and Statement of profit and loss for the year ended March 31, 2017

1) Expected Credit Loss (ECL) Provision

The Company has provided ECL as per Ind AS. Impact of ECL as on date of transition is recognised in opening reserves and changes thereafter are recognised in Statement of Profit and Loss .

2) Defined benefit liabilities

Both under Indian GAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to the statement of profit and loss. Under Ind AS, remeasurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognised immediately in the balance sheet with a corresponding debit or credit to other equity through OCI.

3) Property, plant and equipment

The Company have considered fair value for property, viz land in accordance with stipulations of Ind AS 101 with the resultant impact being accounted for in the reserves.

4) Investment Properties

Investment Properties Under previous GAAP,investment properties were presented as a part of non-current Investments or Plant, Property and Equipment. Under Ind AS,investment properties are required to be separately presented on the face of the balance sheet.There is no impact on the total equity or profit as a result of this adjustment.

5) Deferred Tax (Including MAT Credit)

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. This has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.

In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences.Deferred tax adjustments are recognised in correlation to the underlying transaction either in other equity or a separate component of equity.

Under Previous GAAP, MAT credit was disclosed under non-current assets. In accordance with Ind AS 12, deferred tax asset shall include any carry forward unused tax credits. Hence, MAT credit entitlement has been included in deferred tax asset.

Leasehold land is a non-depreciable asset, Management is expecting that its carrying value will be recovered through sale and the indexation benefit at the time of disposal will be available, accordingly deferred tax asset on the difference between carrying value and indexed value has been created.

6) Revenue

Under Indian GAAP, revenue from sale of products was presented excluding excise duty.Under Ind AS, revenue from sale of products is presented inclusive of excise duty.Excise duty paid is presented on the face of the statement of profit and loss as part of expenses.There is no impact on total equity and profits.

7) Other Comprehensive Income

Under Indian GAAP, the Group has not presented other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP profit or loss to profit or profit or loss as per Ind AS. Further, Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.

8) Statement of Cash Flows

The Ind AS adjustments are either non cash adjustments or are regrouping among the cash flow from operating, investing and financing activities. Consequently, Ind AS adoption has no impact on the net cash flow for the year ended 31st March, 2017 as compared with the previous GAAP.

b. Terms/rights attached to equity shares:

(i) The company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share.

(ii) In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

Nature and purpose of reserves Securities premium reserve

The amount received in excess of face value of the equity shares is recognised in Securities Premium Reserve.

Retained earnings

Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders, if any.

Remeasurements of Net Defined Benefit Plans:

Differences between the interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognised in ‘Other comprehensive income’ and subsequently not reclassified to the Statement of Profit and Loss.

Nature of security and terms of repayment :

Term loan from bank

Rs 1,241.17 lacs (PY Rs. 1034.04 lacs). The loan is secured by hypothecation of Plant and Machinery at Vadodara unit and collaterally secured by Equitable Mortgage of land and building at Vadodara unit. It is further secured by Personal Guarantee of two Directors of the Company. Term loan from Indian Bank carries interest @ 10% p.a. The loan is repayable in 32 equal quarterly instalments starting from March, 2018.

Rs 587.28 lacs (PY Rs. Nil). The loan is secured by hypothecation of Plant and Machinery at Vadodara unit and collaterally secured by Equitable Mortgage of land and building at Vadodara unit. It is further secured by Personal Guarantee of two Directors of the Company. The loan from Indian bank carries interest @ MCLR- 1 year (8.50%) 3.00% i.e. 11.50% and is repayable in 78 monthly installments of \rs. 11.05 lacs per month commencing from April, 2018. Interest is to be serviced as and when debited to the account Hire Purchase Loans

Rs 25.79 lacs (PY Rs. 34.24 lacs) Hire purchase loan from Axis Bank. The loan is secured by hypothecation of vehicles financed.Hire purchase loans from Axis Bank Ltd carries interest @ 9.5% p.a. The loans are repayable in 60 equal monthly instalments starting from November, 2015.

From Others

Rs. 89.80 lacs (PY Rs. 86.40 lacs) Hire Purchase Loan from Kotak Mahindra Prime Ltd.The loan is secured by hypothecation of vehicles financed. Hire purchase loans from Kotak Mahindra Prime Ltd carries interest @ 10.67% p.a. The loan is repayable in 60 equal monthly instalments starting from June, 2016.

Secured loans from Banks includes :

a) Cash Credit facility from Kotak Mahindra Bank amounting to Rs. 684.04 lacs (PY Rs. 180.27 lacs) is secured by 1st Hypothecation charge on Stocks, Receivable & all current assets and collaterally secured by Equitable Mortgage of Industrial Property at Baddi & Corporate office, Mumbai. It is further secured by Personal Guarantee of Directors of the Company. It carries interest @ (KMBR as on date 9.50%) 1% with a minimum of 10.5%.

b) Cash Credit facility from Indian Bank amounting to Rs. 170.40 lacs (PY 37.28 lacs) is secured by 1st Hypothecation charge on Stocks, WIP and finished goods, book debts/other Receivables of Vadodara unit and collaterally secured by Equitable Mortgage of land and building bearing block no 61 & 62 at Vadodara. It is further secured by Personal Guarantee of Directors of the Company. It carries interest @ MCLR- 1 year (8.60%) 1.40% i.e. 10%.

Note : W.e.f 2nd June 2016, excise duty has been levied on the product manufactured at baddi unit at Himachal Pradesh which was exempted earlier by central government being backward state.

Consequent to the introduction of Goods and Service Tax (GST) with effect from July 1, 2017, Central Excise Duty, Value Added Tax (VAT),etc. have been replaced by GST. In accordance with AS-9 “Revenue Recognisation” and Schedule III of Companies Act 2013, GST is not Included in Revenue from operations from 1st July 2017 onwards. However, for the period April 2017 to June 2017 and Earlier Comparative Periods, excise duty is included in the revenue form operations hence not comparable

* Sales are reported net of discounts, rebates and returns.

Note 3 : Earnings per equity share of Rs. 10 each

The amount considered in ascertaining the Company’s earnings per share constitutes the net loss after tax. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share and also the weighted average number of shares which could have been issued on conversion of all dilutive potential shares.

Note 4 : Related party disclosures as required under Indian Accounting Standard 24, “Related party disclosures” are given below:

a) Names of related parties and nature of relationship (to the extent of transactions entered into during the year except for control relationships where all parties are disclosed)

Note :

Securities and Exchange Board of India (SEBI) had passed an Adjudication Order No - ID-4/AO/DRK/675-680/01-05/2015 dated January 12, 2015 against the Company and its directors/officials. As per the said Order, a penalty of Rs 100 lacs was imposed on the Company and Rs 1,080 lacs on five other persons comprising of three directors and two former officials of the Company.

The said dispute is settled by an order dated March 21, 2018 and the penalty of Rs.15 lacs was imposed on the company for which a provision has been created in the books as on March 31, 2018

The Company has obtained license under Export Promotion Capital Goods Scheme(EPCG) for purchase of capital goods on zero percent custom duty. Under the EPCG the Company needs to fulfill certain export obligations, failing which, it is liable for payment of custom duty. Export obligations is Rs. 3,127.60 lacs (P.Y. Rs. 3,127.60 lacs) out of which Rs. 1,254.25 lacs needs to be completed within 6 years & Rs. 1,873.34 lacs needs to be completed within 8 years from the date of purchase of respective Capital Goods.

Note 5 : Operating leases disclosures as required under Indian Accounting Standard 17, “Leases”:

Future minimum lease payments payable under non-cancellable operating leases in aggregate for the following periods:

Note 6 : Segment Reporting as required under Indian Accounting Standard 108, “Operating Segments” :

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (“CODM”) of the Company. The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Director/Chairman of the Company. The Company operates only in one Business Segment i.e. “Manufacturing of Drugs & Pharmaceutical”, hence does not have any reportable Segments as per Ind AS 108 “Operating Segments”.

Note 7 : Disclosure relating to employee benefits as per Ind AS 19 ‘Employee Benefits’

A Defined benefit obligations - Gratuity (Non Funded)

The gratuity plan is governed by the Payment of Gratuity Act, 1972 under which an employee who has completed five years of service is entitled to specific benefits. The level of benefits provided depends on the member’s length of service and salary at retirement age.

Note 8 : Financial risk management objectives and policies

The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk. Major financial instruments affected by market risk includes loans and borrowings.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s total debt obligations with floating interest rates.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company’s profit/(loss) before tax is affected through the impact on floating rate borrowings, as follows:

Foreign currency risk

The Company is exposed to insignificant foreign exchange risk as at the respective reporting dates. Other price risk

The Company is not exposed to any other price risk.

Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure of the financial assets are contributed by trade and other receivables, cash and cash equivalents and security deposits.

Trade receivables

The Company extends credit to customers in normal course of business. The Company considers factors such as credit track record in the market and past dealings for extension of credit to customers. To manage credit risk, the Company periodically assesses the financial reliability of the customer, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivables. Outstanding customer receivables are regularly monitored to make an assessment of recoverability. Receivables are provided as doubtful / written off, when there is no reasonable expectation of recovery. Where receivables have been provided / written off, the company continues regular follow up,engage with the customers, legal options / any other remedies available with the objective of recovering these outstandings.The Company is not exposed to concentration of credit risk to any one single customer since services are provided to vast specturm.

Other Financial Assets

The Company is maintains exposure in cash and cash equivalents, security deposits and other receivables. The company goes through regular follow up for recovering the amount of deposit and other receivables. Credit risk on cash and cash equivalents is limited as the Company generally invest in deposits with banks and financial institutions with high credit ratings.

iii. Liquidity risk

Liquidity is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company’s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows.

The table below provides details regarding the contractual maturities of significant financial liabilities:

Note 9 : Capital management

For the purpose of the Company’s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The Company strives to safeguard its ability to continue as a going concern so that they can maximise returns for the shareholders and benefits for other stake holders. The aim to maintain an optimal capital structure and minimise cost of capital.

To maintain or adjust the capital structure, the Company usually turns to reputed banks and other financial institutions for funds. Consistent with others in the industry, the Company monitors its capital using the gearing ratio which is total debt divided by total capital plus total debts._

Note 10 : Prior year comparatives

Previous year’s figures have been regrouped or reclassified, to conform to the current year’s presentation wherever considered necessary.

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Mar 31, 2016

b) Terms & Conditions

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share.

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

e) I information on equity shares alloted as bonus shares 51,52,412 Shares were alloted as Bonus shares during the last five years by capitalization of Free Reserves. Details of which are as mentioned below:

Rs 41.92 lacs (PY Nil) hire purchase loans carry interest @ 9.5% p.a. The loans are repayable in 60 equal monthly installments starting from the respective date of finance. The loan are secured by hypothecation of vehicles financed.

Secured Loans from Banks includes:

a) Cash Credit facility from Kotak Mahindra Bank amounting to Rs. 528.36 lacs (PY Rs. 51.25 lacs) is secured by 1st hypothecation charge on stocks, receivable & all current assets and collaterally secured by equitable mortgage of industrial property at Baddi & corporate office, at Mumbai. The facility is further secured by personal guarantee of Directors of the Company and carries interest @ (KMBR-as on date 9.50%) 1% with a minimum of 10.5%.

Notes : The information regarding dues to Micro Small and Medium Enterprises have been determined on the basis of information available with the company.

*Disclosures required under Sec 22 of MSMED Act, 2006

Note 28 : Contingent liabilities

(i) Letter of credit outstanding Rs. Nil (P.Y. Rs. 368.66 lacs).

(ii) Bank guarantee outstanding Rs. 190.63 lacs (P.Y. Rs. 243.8 lacs).

(iii) Disputed statutory liabilities:

(a) Securities and Exchange Board of India (SEBI) has passed an Adjudication Order on January 12, 2015 against the Company and its directors/officials. As per the said Order, a penalty of Rs 1 crore is imposed on the Company and Rs 10.8 crores on five other persons comprising of three directors and two former officials of the Company. This is on account of certain irregularities in its IPO covering the period from June 2011 to September 2011.

The Company has filed an Appeal against the Order of SEBI before the Securities Appellate Tribunal and awaiting its decision.

(b) Disputed Income Tax demand - matters under appeal : Rs. 1,740.23 lacs (P.Y. Rs. 1,400.72 lacs).

The Company has received Notice of Demand u/s 156 of the Income Tax Act, 1961 for A.Y 2012-13 and A.Y. 2013-14 of Rs. 1,400.72 lacs and Rs. 339.51 lacs respectively. The Company has filed an appeal against the same, and has paid Rs. 665.58 lacs including adjustment for MAT credit of Rs. 307.62 lacs under protest which is disclosed under "Long term loan and advances".

Note 29: Commitments

(i) Estimated amount of contracts remaining to be executed on capital account (net of advances already made) and not provided for isRs. 65.46 lacs (P.Y. 1,193.05 lacs).

(ii) EPCG commitment outstanding: Rs. 449.16 lacs (P.Y. Rs. 449.16 lacs).

The Company has obtained license under Export Promotion Capital Goods Scheme (EPCG) for purchase of capital goods on zero percent custom duty. Under the EPCG the Company needs to fulfill certain export obligations, failing which, it is liable for payment of custom duty. Total Export obligations amounts to Rs. 3,163.29 lacs (P.Y. Rs. 3,163.29 lacs) out of which Rs. 1,289.95 lacs needs to be fulfilled within 6 years & Rs. 1,873.34 lacs needs to be fulfilled within 8 years from the date of purchase of respective Capital Goods.

Note 30 : In the opinion of the Board, Current Assets, Loans & Advances are realizable in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet. The provision for all known liabilities is adequate and not in excess of amount reasonably necessary.

Note 31 : Depreciation

The Company has revised depreciation rates on tangible fixed assets w.e.f. April 01, 2014 as per the useful life specified in the Schedule II of the Companies Act, 2013 or as re-assessed by the Company. As prescribed in Schedule II, an amount of Rs 5.52 lacs (net of deferred tax) has been charged to the opening balance of retained earnings for the assets in respect of which the remaining useful life is NIL as on April 01, 2014 and in respect of other assets on that date, depreciation has been calculated based on the remaining useful life of those assets.

* The estimates of future salary increases, considered in a actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

(i) Changes in the present value of defined benefit obligation representing reconciliation of opening and closing balances thereof:

Note 1: Segment Reporting

The Company is mainly engaged in the business of "Manufacturing of Drugs & Pharmaceutical" and there is no other reportable business segment as per Accounting Standard (AS-17) issued by The Institute of Chartered Accountants of India.

Note 2: Related Party Disclosures

a. List of Related Parties :

(i) Directors

Mr. Atul Ranchal (Chairman)

Mr. Rajesh Mahajan (Managing Director)

Dr. Durga Shankar Maity (CEO cum Technical Director)

(ii) Key Managerial Personnel

Mr. Ketan Shah (Chief Financial Officer) (upto 9th October, 2014)

Mr. Anil Kumar Pillai (Chief Financial Officer) (from 1st November, 2014)

Ms. Ashima Bnodha (Company Secretary) (upto 16th June, 2014)

Mr. Ankit Parekh (Company Secretary) (upto 20th June, 2015) Mrs. Jyoti Sancheti (Company Secretary) (From 23rd November2015)

(iii) Relative of Directors with whom the Company has entered into transaction

Mrs. Saras Gupta

Mrs. Rajani Ranchal Mrs. Davinder Kumari

Note 3 : Corporate Social Responsibility

During the year the Company has incurred expenditure towards CSR activities and has spent Rs. 6.09 lacs (as stated below) as against Rs. 34.61 lacs as required by section 135 read with Schedule VII of the Companies Act, 2013.

Note 4 : The Company had raised an amount of Rs. 6300.00 lacs through an IPO of equity shares during the financial year 2011-12, by way of 63.00 lacs Equity Shares of Rs 10/- at a premium of Rs 90/- per share. The said proceeds has been fully utilized over the years (including current year) in terms of the offer document for the purpose of setting up a new manufacturing unit in Gujarat, general corporate purpose and meeting IPO expenses.

Note 5 : The Company has re-grouped, reclassified and/or re-arranged previous year''s figures, wherever necessary to confirm to current year''s classification.

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Mar 31, 2015

Note 1 : Contingent liabilities

(i) Letter of credit outstanding Rs, 368.66 lacs (P.Y. Rs, 246.49 lacs).

(ii) Bank guarantee outstanding Rs, 243.8 lacs (P.Y. Rs, 187.63 lacs).

(iii) Disputed statutory liabilities:

(a) Securities and Exchange Board of India (SEBI) has passed an Adjudication Order on January 12, 2015 against the Company and its directors/offcials. As per the said Order, a penalty of Rs 1 crore is imposed on the Company and Rs 10.8 crores on fve other persons comprising of three directors and two former offcials of the Company. This is on account of certain irregularities/ fraudulent activities in its IPO covering the period from June 2011 to September 2011.

The Company has fled an Appeal against the Order of SEBI before the Securities Appellate Tribunal and awaiting its decision.

(b) Disputed Income Tax demand - matters under appeal : Rs, 1,400.72 lacs.

(i) Estimated amount of contracts remaining to be executed on capital account (net of advances already made) and not provided for is Rs, 1,193.05 lacs (P.Y. 1.58 lacs).

(ii) EPCG commitment outstanding : Rs, 449.16 lacs (P.Y. Rs, 449.16 lacs).

The Company has obtained license under Export Promotion Capital Goods Scheme(EPCG) for purchase of capital goods on zero percent custom duty. Under the EPCG the Company needs to fulfll certain export obligations, failing which, it is liable for payment of custom duty. Total Export obligations amounts to Rs, 3,163.29 lacs (P.Y. Rs, 3,163.29 lacs) out of which Rs, 1,289.95 lacs needs to be fulfilled within 6 years & Rs, 1,873.34 lacs needs to be fulfilled within 8 years from the date of purchase of respective Capital Goods.

Note 2 : In the opinion of the Board, Current Assets, Loans & Advances are realizable in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet. The provision for all known liabilities is adequate and not in excess of amount reasonably necessary.

Note 3 : Depreciation

Effective from 1st April,2014 the Company has charged depreciation on its fixed assets based on their useful life as stipulated under Schedule II of the Companies Act, 2013. Due to this, the depreciation for the year ended on 31st March, 2015 is higher by Rs, 25.25 lacs as compared to the depreciation computed under the provisions of the Companies Act, 1956. Further, based on the transitional provisions as provided in Note 7(b) of Schedule II, Rs, 8.17 lacs is adjusted against opening balance of Retained Earnings.

Note 4 : Related Party Disclosures

a. List of Related Parties : i) Directors

Mr. Atul Ranchal (Chairman)

Mr. Rajesh Mahajan (Managing Director)

Dr. Durga Shankar Maity (CEO cum Technical Director) ii) Key Managerial Personnel

Mr. Ketan Shah (Chief Financial Officer) (upto 9th October, 2014)

Mr. Anil Kumar Pillai (Chief Financial Officer) (from 1st November, 2014)

Ms. Ashima Bnodha (Company Secretary) (upto 16th June, 2014)

Mr. Ankit Parekh (Company Secretary) (from 1st August, 2014) iii) Relative of Directors with whom the Company has entered into transaction

Mrs. Saras Gupta

Mrs. Rajani Ranchal

Mrs. Davinder Kumari

Note 5 : The financial statements for the year ended 31st March, 2014 were audited by another form of Chartered Accountants and the same has been reclassified, wherever considered necessary, to conform with the current year's presentation. Figures wherever not available/ furnished in last year's financial statements have not been given and hence are not strictly comparable.

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Mar 31, 2014

1. 91,20,112(PY91,20,112) Shares out of Issued, Subscribed and Paid up Share Capital were alloted as Bonus Shares in last five years by Capitalization of Reserves.

2. The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act,2006 and, hence, disclosures relating to amounts unpaid as at the end together with interest paid/payable under this Act has not been given.

3. Other Payable includes amounts payble on account of EPF, ESI, Salary Payable, Telephone exp.etc.

4. Inventories are valued as per method described in significant Accounting Policies.

5. The Company has sent letters to parties to confirm their balances, but only few parties have responded so far. Hence Debtor balances appearing in the Balance Sheet are subject to their Reconciliation.

6. As per Accounting Standard 15"Employee Benefits", the disclosures as defined in the Accounting Standard are given below:

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method , which recognises each period of service as giving rise to additional unit.

7 : The company operates only in one business segment viz. "Pharmaceutical Formulation" Since in the opinion of management, the inherent nature of activities engaged by the company are governed by the same set of risks and rewards, so these have been grouped and identified as a single segment in accordance with the Accounting Standard on Segment Reporting (AS-17) issued by ICAI.

8 : During the year company has undertaken a review of all Fixed Assets in line with the requirements of AS-28 on "Impairement of Assets" issued by the Institute of Chartered Accountants of India. Based on such review, no provision for impairement is required to be recognized for the year.

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Mar 31, 2012

1.1 91.20,112( PY 91,20,112) Shares out of Issued , Subscribed and Paid up Share Capital were alloted as Bonus Shares in last five years by Capitalization of Reserves

1.2 During the financial year 2011-12 , the Company has raised a sum of Rs 63,00,00,000 through issue of 63,00,000 Equity Shares of Rs 10/- each at a premium of Rs 90/- per share. The issue was made through Book Building Process.

2.1 The Company has not recevied information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act,2006 and, hence, disclosures relating to amounts unpaid as at the end together with interest paid/payable under this Act has not been given.

3.1 As per Accounting Standard 15"Employee Benefits", the disclosures as defined in the Accounting Standard are given below:

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method , which recognises each period of service as giving rise to additional unit

4 The company operates only in one business segment viz. "Pharmaceutical Formulation"

Since in the opinion of management, the inherent nature ot activities engaged by the company are governed by the same set of risks and rewards, so these have been grouped and identified as a single segment in accordance with the Accounting Standard on Segment Reporting (AS-17) issued by ICAf.

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Mar 31, 2011

1. The figures for the year have been re-grouped / re-arranged /.re-cast wherever necessary t market it comparable.

2. The company has sent letters of balance confirmation to all the parties but only a few have responded so far. So the balance in the party accounts whether in debit or in credit subject to reconciliation.

3. A sum of Rs.69,125 (Previous Year Rs.1,15,125 ) is due from Staff of the company being imprest for traveling, conveyance and other charges.

4. Fixed deposits with banks of Rs.60,99,000.00 (previous year Rs. 78,42,256) as pledged as Margin Money with banks.

5. Remittance in foreign currency on account of Dividend is ML (P/YML)

6. The company operates only in one business segment viz, "Pharmaceutical Formulation*' and is engaged in manufacturing and trading of medicines. Since in the opinion of management, the inherent nature of activities "engaged by the .company are governed by the same set of risks -and rewards, so these have been grouped and identified as a single segment in accordance with the Accounting Standard on Segment Reporting (AS-17) issued by ICAI.

7. In the opinion of die board, and to the best of their knowledge and belief* the value on realisation of the current assets, loans & advance shown In the Balance Sheet in die ordinary course of business will be at least equal to the amount at which they are stated in the Balance Sheet and provision for all known and determined liabilities has been made- It. Some of suppliers of material have been identified as small scale industrial undertaking on the basis of information available with the company. However none of these parties has an outstanding credit balance exceeding Rs.1,00,000.00 as on 31.03,2011

8. Contingent Liabilities;. (Not provided for in the books of accounts)

Current Year Previous Year

(a) Letter of Credit outstanding $5,24J Lacs - (Appx Rs.233.64 lacs)

9. During the year, the company has undertaken a review of ail fixed assets in line with the requirements of AS-28 on "Impairment of Assets" issued by the Institute of Chartered Accountant of India. Based on such review, no' provision for impairment is required to be recognized for the year.

10, "He figures in the Balance Sheet and Profit & Loss Account for the year have been rounded off to nearest multiple of rupee.

11 The company-has provided a Provision for gratuity and leave encasement as per valuation which was done as required under accounting standard (AS-15) "accounting for retirement benefits" by an independent Aetuarian valuer.

12, Additional information pursuant to the provision of paragraph 3,4C & 4D of Part 11 of schedule VI of the Companies Act, 1956. (as certified by the management)