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Notes to Accounts of Granules India Ltd.

Mar 31, 2016

(a) Terms/Rights attached to equity shares:

The Company has only one class of equity shares having face value of Rs.1/- . Each holder of equity shares is entitled to one vote per share. The company declares dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

A final dividend of 20 paise per share of face value of Rs.1/- each has been recommended by the Board of Directors at their meeting held on April 28, 2016. This is in addition to three interim dividends of 15 paise each per share of face value of Rs.1/- declared and paid during the year.

Post approval of final dividend of 20 paise per equity share by the shareholders, the total dividend for the financial year 2015-16 would aggregate 65 paise per equity share of face value of Rs.1/- each (dividend for the previous year 2014-15, 50 paise per equity share of face value of Rs.1/- each)

In the event of liquidation of the company, the holders of equity shares will be entitled to receive the 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.

1. Employee Stock Option Plan

Granules India Limited - Employee Stock Option Scheme 2009

a) Pursuant to the decision of the shareholders at their meeting held on 25th September, 2009, the Company has formulated an Employee Stock Option Scheme 2009 to be administered by the Nomination & Remuneration Committee of the Board of Directors.

b) Under the Plan, options not exceeding 1,00,63,070 have been reserved to be issued to the eligible directors and employees (Employees under permanent employment of the Company and its subsidiary company(ies), including Directors of the Company and its subsidiary, whether whole time or not, whether working in India or abroad or otherwise, except the Promoter Directors and Promoter group employees) with each option conferring a right upon the Optionee to apply for one equity share.

c) The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Nomination & Remuneration Committee / Board meeting at which the grant of options is approved.

d) Under the above Scheme till date, options were granted in four tranches viz. Grant I, Grant II, Grant III & Grant IV. The options granted under the Plan shall start vesting in tranches after one year from the date of grant and not more than two, three and five years (differs from optionee to optionee) under Grant I, five years under Grant II & III and four years under Grant IV from the respective date of grant of the options.

e) The exercise price being equal to the closing market price prevailing on the date prior to the date of grant, there is no deferred compensation cost to be amortized over the vesting period.

2. The Government of Andhra Pradesh, Commissionerate of Industries has vide its Letter No.20/2/9/0444/ID dated 11th October 1999 and its clarification vide Letter dated 4th August 2001 determined an eligibility of Rs.184.12 Lakhs towards Sales tax deferment on the sale of Paracetamol and the Sales tax payable by the Company for a period of 4 years commencing from June 30, 1998 to June 29, 2012 is deferred. The liability of Rs. 62.23 Lakhs as at March 31, 2016 (Previous year Rs.63.89 Lakhs) for the deferred Sales tax is shown under unsecured loans.

3. Previous year''s figures have been regrouped/reclassified wherever necessary to confirm to current year''s classification.

4. Figures in Balance Sheet, Statement of Profit and Loss and Notes to audited financial statements have been rounded off to the nearest thousand and have been expressed in terms of decimals of thousands.


Mar 31, 2015

Corporate information

Granules India Limited (the company) is a public domiciled in India and incorporated under the Companies Act, 1956. Its shares are listed on two Stock exchanges in India. The company is engaged in the manufacturing and selling of Active Pharmaceutical Ingredients (APIs) and Pharmaceutical Formulation intermediates (PFIs) and Finished Dosages (FDs). The company caters to both domestic and international markets.

1. Refer Note 2.1 (Note 2)

(b) Terms/Rights attached to equity shares:

The Company has only one class of equity shares having face value of Rs.1/- . Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year end 31st March 2015, the amount of per share dividend recognized as distribution to equity shareholders was 50 paise per equity share of Rs.1/- each face value (31st March 2014: Rs.3.50/- per share of Rs.10/- each face value)

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

All secured term loans are secured by a paripassu first charge on fixed assets and a paripassu second charge on the current assets of the Company.

Out of the foreign currency loans from Financial Institutions an amount of Rs.3,753.96 Lakhs as on 31st March 2015 is further guaranteed by the personel guarantee of the Chairman & Managing Director of the Company.

Deferred sales tax loan is interest free and payable in 14 yearly installments commencing from June 2013 onwards

2.1 Deferred Tax Liabilities

Deferred tax has been accounted for in accordance with the Accounting Standard - 22, "Accounting for taxes on income", issued by the Institute of Chartered Accountants of India. The components of Deferred Tax Assets and Liabilities recognized in these accounts are as follows:

2.2 Employee Stock Option Plan

Granules India Limited - Employee Stock Option Scheme 2009

a) Pursuant to the decision of the shareholders at their meeting held on 25 th September 2009, the Company has formulated an Employee Stock Option Scheme 2009 to be administered by the Compensation & Remuneration Committee of the Board of Directors.

b) Under the Plan, options not exceeding 1,00,63,070 have been reserved to be issued to the eligible directors and employees (Employees under permanent employment of the Company and its subsidiary company (ies), including Directors of the Company and its subsidiary, whether whole time or not, whether working in India or abroad or otherwise, except the Promoter Directors and Promoter group employees) with each option conferring a right upon the Optionee to apply for one equity share.

c) The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Compensation & Remuneration Committee / Board meeting at which the grant of options is approved.

d) Under the above Scheme till date, options were granted in four tranches viz. Grant I, Grant II, Grant III & Grant IV. The options granted under the Plan shall start vesting in tranches after one year from the date of grant and not more than two, three and five years (differs from optionee to optionee) under Grant I, five years under Grant II & III and four years under Grant IV from the respective date of grant of the options.

e) The exercise price being equal to the closing market price prevailing on the date prior to the date of grant, there is no deferred compensation cost to be amortized over the vesting period.

f) The following is the number of granted options outstanding during the year:

2.3 The Government of Andhra Pradesh, Commissionerate of Industries has vide its Letter No.20/2/9/0444/ID dated 11th October 1999 and its clarification vide Letter dated 4th August 2001 determined an eligibility of Rs.184.12 Lakhs towards Sales tax deferment on the sale of Paracetamol and the Sales tax payable by the Company for a period of 14 years commencing from 30th June 1998 to 29 th June 2012 is deferred. The liability of Rs.63.89 Lakhs as at 31st March 2015 (Previous year Rs.64.73 Lakhs) for the deferred Sales tax is shown under unsecured loans.

(Rs in Lakhs) As at As at Particulars 31st March 2015 31st March 2014

1) Contingent Liabilities

a) Claims against the Company not acknowledged as debt

Income Tax 1,182.43 1,182.43

Excise 226.76 205.55

Service Tax 95.41 89.37

Customs 43.47 43.47

Total (a) 1,548.07 1,520.82 b) Bills discounted with banks 21,561.84 17,820.42

Total (b) 21,561.84 17,820.42

c) Corporate Guarantee given for JV loan 12,096.00 14,863.77

Total (c) 12,096.00 14,863.77

TOTAL (a b c) 35,205.91 34,205.01

2) Commitments

a) Estimated amount of contracts to be executed on capital account 1,730.26 2,086.76

Grand Total 36,936.17 36,291.77

2.4 Related party disclosures required as per Accounting Standard (AS-18) on "Related party disclosures" issued by the Institute of Chartered Accountants of India, are as below:

a) Names of related parties and the description of relationship:

Name Relationship

Granules USA Inc Wholly owned subsidiary Company

GIL Life sciences Private Limited Wholly owned subsidiary Company

Granules Pharmaceuticals Inc Wholly owned subsidiary Company

Granules-Biocause Pharmaceutical Joint - Venture Co.Ltd

Granules Omnichem Private Limited Joint - Venture

Key Management Personnel:

Mr. C. Krishna Prasad Chairman & Managing Director

Mr. Harsha Chigurupati Executive Director

Ms. C. Uma Devi Executive Director

Mr. VVS. Murthy Chief Financial Officer

Ms. Chaitanya Tummala Company Secretary

Others:

Mr. Vijay Ramanavarapu GM-Procurement

Ms. C. Priyanka Manager- Marketing

Ms. Shivangi Sharma Company Secretary

Ms. VVN Chandrika Executive

Karvy Computershare Private Limited Directors interest

Tyche Technologies Pvt.Ltd Directors interest

2.5 The Scheme of amalgamation submitted by Auctus Pharma Ltd (APL), a wholly owned subsidiary of the Company, was sanctioned by the Hon'ble High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh vide its order dated 23 rd September 2014 and the same has been filed with the Registrar of Companies (RoC), on 13 th November 2014. The Scheme is effective from 1st April 2013 (i.e. appointed date).

a) The Company has taken over the assets valued at Rs.17,861.01 Lakhs and liabilities aggregating to Rs.7,348.69 Lakhs of APL, based on fair valuation performed by an independent valuer.

b) As the financial statements of the Company for previous year ended 31st March 2014 were already approved by the shareholders of the Company, the previous year balances (i.e for FY 2013-14) are not restated and all the relevant accounting entries with respect to the Scheme are accounted for on 1st April 2014 and consequently, the surplus in the Statement of Profit and Loss as on 31st March 2014 of APL has been transferred to the opening reserve (Refer note 2.2.e) of the Company.

c) The entire issued, subscribed and paid up share capital and reserves and surpluses (except statutory reserves of the APL), after the appointed date stand cancelled. Accordingly, investment by the Company in APL amounting to Rs.10,225.51 Lakhs has been cancelled along with all other inter-company balances including loans, advances outstanding.

d) The excess of fair value of assets over the liabilities after adjusting value of the investments in APL, amounting to Rs.286.80 Lakhs has been recognized as capital reserve.

e) No consideration is payable or receivable on implementation of the Scheme as the Scheme involves a wholly owned subsidiary

f) Investment subsidy of Rs.15 Lakhs of APL will continue in Reserves & Surpluses even after amalgamation and the same amount is being shown under Other Non-Current Assets as "Amalgamation adjustment account".

# in respect of the Tax demand of Rs. 354.39 lakh pertaining to the Asst. Year 2008-09, ITAT has disposed off the appeal in favour of the company, the consequential order on the same is pending to be passed by the Transfer Pricing Officer.

@ Pertains to Auctus Pharma Limited which was amalgamated with the company during the year.

2.6 Previous year's figures have been regrouped / reclassified wherever necessary to confirm to current year's classification.

2.7 Figures in Balance Sheet, Statement of Profit and Loss and Notes to audited financial statements have been rounded off to the nearest thousand and have been expressed in terms of decimals of thousands.


Mar 31, 2013

CORPORATE INFORMATION

Granules India Limited (the Company) is a public domiciled in India and incorporated under the Companies Act, 1956. Its shares are listed on two Stock Exchanges in India. The Company is engaged in the manufacturing and selling of Active Pharmaceutical Ingredients (APIs), Pharmaceutical Formulation Intermediates (PFIs) and Finished Dosages (FDs). The Company caters to both domestic and international markets.

1.1 EMPLOYEE STOCK OPTION PLAN

Granules India Equity Option Plan 2002

a) Pursuant to the decision of the shareholders at their meeting held on July 30, 2002, the Company has formulated an Employee Stock Option Plan 2002 to be administered by the Compensation & Remuneration Committee of the Board of Directors.

b) Under the Plan, options not exceeding 391,082 have been reserved to be issued to the eligible directors and employees (Employees under permanent employment of the Company and its subsidiary Company (ies), including Directors of the Company and its subsidiary, whether whole time or not, whether working in India or abroad or otherwise, except the Promoter Directors and Promoter group employees), with each option conferring a right upon the Optionee to apply for one equity share.

c) The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Compensation & Remuneration Committee / Board meeting at which the grant of options is approved.

d) Under the above Scheme, options were granted in three tranches viz. Grant I, Grant II & Grant III. The options granted under the Plan would vest not less than one year and not more than five years under Grant I & II and two years under Grant III from the respective date of grant of the options.

e) The exercise price being equal to the closing market price prevailing on the date prior to the date of grant, there is no deferred compensation cost to be amortized over the vesting period.

Granules India Limited - Employee Stock Option Scheme 2009

a) Pursuant to the decision of the shareholders at their meeting held on September 25,2009, the Company has formulated an Employee Stock Option Scheme 2009 to be administered by the Compensation & Remuneration Committee of the Board of Directors.

b) Under the Plan, options not exceeding 1,006,307 have been reserved to be issued to the eligible directors and employees (Employees under permanent employment of the Company and its subsidiary Company (ies), including Directors of the Company and its subsidiary, whether whole time or not, whether working in India or abroad or otherwise, except the Promoter Directors and Promoter group employees) with each option conferring a right upon the Optionee to apply for one equity share.

c) The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Compensation & Remuneration Committee / Board meeting at which the grant of options is approved.

d) Under the above Scheme till date, options were granted in three tranches viz. Grant I, Grant II & Grant III. The options granted under the Plan shall start vesting in tranches after one year from the date of grant and not more than two, three and five years (differs from optionee to optionee) under Grant I and five years under Grant II & III from the respective date of grant of the options.

e) The exercise price being equal to the closing market price prevailing on the date prior to the date of grant, there is no deferred compensation cost to be amortized over the vesting period.

1.2

The Government of Andhra Pradesh, Commissionerate of Industries has vide its Letter No.20/2/9/0444/ID dated 11 October 1999 and its clarification vide Letter dated U August 2001 determined an eligibility of Rs.18412 lakhs towards Sales tax deferment on the sale of Paracetamol and the Sales tax payable by the Company for a period of 1U years commencing from 30 June 1998 to 29 June 2012 is deferred. The liability of Rs.75.24 Lakhs as at 31 March 2013 (Previous yearRs.75.24 lakhs) for the deferred Sales tax is shown under unsecured loans.

1.3

Sundry debtors include a sum of Rs.3,040.17 Lakhs (Previous YearRs.3,414.45 lakhs) due from Subsidiary Company.

1.4

During the year, the Company has capitalized borrowing costs of Rs.364.20 Lakhs (Previous Year Rs.215.69 Lakhs).


Mar 31, 2011

1) Contingent liabilities not provided for in respect of:

(Rs. in Lakhs)

Particulars As at As at March 31, 2011 March 31, 2010

a) Claims against the Company not acknowledged as debts:

Customs duty 705.39 210.93

b) Estimated amount of contracts remaining to be executed 930.39 426.56 on Capital account and not provided for ( net of advances)

c) Letters of credit and Bank Guarantees issued by Banks 2,202.52 1,812.73

d) Bills discounted with banks 8,511.11 7,893.38

a) Term loans: Term loans from Banks are secured by equitable mortgage of Land and buildings and hypothecation of plant and machinery located at Jeedimetla, Gagillapur and Bonthapally on pari passu basis.

Term loans are further secured by second charge on hypothecation of stocks of raw materials, finished goods, semi finished goods and receivables. The term loans from Kotak Mahindra Bank, Exim Bank and State Bank of Travancore are further secured by personal guarantee of the Managing Director.

b) Working capital facilities: The working capital facilities from Banks are secured by hypothecation of stocks of raw materials, finished goods, semi finished goods and receivables on pari passu basis. The working capital facilities are further secured by a second charge on the fixed assets of the Company on pari passu basis.

c) Hire purchase loans are secured by hypothecation of the asset purchased.

8) Licensed, Installed capacity and actual production of Active Pharmaceutical Ingredients (APIs), Pharmaceutical Formulation Intermediates (PFIs) (As certified by the Management)

11) During the year, the Company has capitalised borrowing costs of Rs. 44.92 lakhs (Previous year nil)

b) Assets: All the assets of the Company except the debtors and loans and advances amounting to Rs. 2,447.69 lakhs (Previous year Rs. 1,935.12 lakhs), are within India.

13) Related party disclosures required as per Accounting Standard (AS-18) on "Related party disclosures" issued by the Institute of Chartered Accountants of India, are as below:

a) Names of related parties and the description of relationship

SL. Name Relationship

No

(i) Granules USA Inc Wholly owned subsidiary Company

(ii) GIL Lifesciences Private Limited Wholly owned subsidiary Company

(iii) Granules Singapore Pte Ltd Wholly owned subsidiary Company

(iv) Granules-Biocause Pharmaceutical Co. Ltd Joint-Venture

(v) Key management personnel: Managing Director

Shri C. Krishna Prasad

(vi) Others:

Dr. C. Nageswara Rao Non Executive Chairman

Mr.CHarsha Executive Director

(vii) Mr.Vijay Ramanavarapu Consultant

14) Employee Benefits

a) Defined benefit plans:

The following table sets forth the status of the Gratuity Plan of the Company and the amounts recognised in the Balance Sheet and Profit and Loss Account:

15) Employee Stock Option Plan

Granules India Equity Option Plan 2002

a) Pursuant to the decision of the shareholders at their meeting held on July 30, 2002, the Company has formulated an Employee Stock Option Plan 2002 to be administered by the Compensation & Remuneration Committee of the Board of Directors.

b) Under the Plan, options not exceeding 3,91,082 have been reserved to be issued to the eligible employees, with each option conferring a right upon the employee to apply for one equity share.

c) The exercise price of the options is the closing market price of the shares on that stock exchange where there is highest trading volume prior to the date of the grant i.e. the date of the Compensation & Remuneration Committee meeting at which the grant of options is approved.

d) Under the above Scheme, options were granted in three tranches viz. Grant I, Grant II & Grant III. The options granted under the Plan would vest not less than one year and not more than five years under Grant I & II and two years under Grant III from the respective date of grant of the options.

e) The exercise price being equal to the closing market price prevailing on the date prior to the date of grant, there is no deferred compensation cost to be amortised over the vesting period.

18) Sundry debtors include a sum of Rs. 4,150.83 lakhs (Previous year: Rs. 3,554.15 lakhs) due from a subsidiary Company

19) Amortisation of Miscellaneous Expenditure:

a) GDR issue expenses of Rs. 151.89 lakhs carried forward from earlier years are amortised over a period of 5 years commencing from the year in which the Projects commence commercial production. Tablet Block at Gagillapur had commenced commercial production during September 2008, hence the issue expenses are proportionately amortised.

b) The Company has implemented a Voluntary Retirement Scheme (VRS). The total cost of separation ofRs. 15.57 lakhs excluding Gratuity under the Gratuity scheme applicable to the employees is amortised over a period of 5 years.

20) The Government of Andhra Pradesh, Commissionerate of Industries has vide its Letter No.20/2/9/0444/ID dated October 11, 1999 and its clarification vide Letter dated August 4, 2001 determined an eligibility of Rs. 184.12 lakhs towards Sales tax deferment on the sale of Paracetamol and the Sales tax payable by the Company for a period of 14 years commencing from June 30, 1998 to June 29, 2012 is deferred. The liability of Rs. 75.24 lakhs as at March 31, 2011 (Previous year Rs. 75.24 lakhs) for the deferred Sales tax is shown under unsecured loans.

21) In terms of accounting policy 11 for the accrual of export benefits, estimated benefits of Rs. 150.57 lakhs (Previous year Rs. 146.16 lakhs) have been taken into account under the DEEC/DEPB Schemes.

23) Previous year's figures have been regrouped / reclassified wherever necessary to confirm to current year's classification.

24) Figures in Balance Sheet and Profit & Loss account have been rounded off to the nearest Rupee and figures in Notes have been rounded off to the nearest thousand and have been expressed in terms of decimals of thousands.

 
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