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Notes to Accounts of Indoco Remedies Ltd.

Mar 31, 2017

NOTE 1: Use of Estimates and Judgments

The estimates and judgments used in the preparation of the financial statements are continuously evaluated by the Company and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances. Differences between actual results and estimates are recognized in the period in which the results are known / materialized.

The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date.

(i) Leased Assets

Land includes the following amounts where the Company is a lessee under a finance lease.

The lease term in respect of assets acquired under finance lease is 95 years. Renewal shall be based on further terms and payment of premium as may be decided / determined by lessor.

(ii) Capital Work in Progress

Capital work in progress mainly comprises :

a. Sterile plant at Goa

b. New plant at Patalganga

c. Regular Capex for new projects

(iii) Property, Plant and Equipment pledged as security

Refer to note 35 for information on Property, Plant and equipment pledged as security by the Company.

Amounts recognized in profit or loss

Provision for write-downs of inventories to net realizable value amounted to Rs. 918.43 lakhs (March 31, 2016 -Rs. 820.48 lakhs). These were recognized as an expense during the year and included in changes in value of inventories of work-in-progress, stock-in-trade and finished goods'' in statement of profit and loss.

C) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. All equity shares of the Company rank pari passu in all respects including the right to dividend. The Company declares and pays dividends 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 ended March 31, 2017, the amount of Rs. 1.60 per share on the face value of Rs. 2/- is proposed to be paid to the equity shares holders of the Company. (Previous year Rs. 1.40 declared and paid as Interim Dividend and Final dividend of Rs. 0.20 declared and paid to the equity shareholders of the Company.

In the event of winding-up, subject to the rights of holders of shares issued upon special terms and conditions, the holders of equity shares shall be entitled to receive remaining assets, if any, in proportion to the number of shares held at the time of commencement of winding-up.

(i) Information about provision for sale return and significant estimates:-

When a customer has a right to return the product within a given period, the Company recognises a provision for returns Rs. 1,808.64 lakhs as at March 31, 2017 (March 31, 2016 - Rs. 1,513.62 lakhs, April 1, 2015 - Rs. 1,393.25 lakhs). This is measured based on the previous history of sales return. Revenue is adjusted for the expected value of the returns and cost of sales & Inventory are adjusted for the value of the corresponding goods to be returned.

(ii) Movement in provision for Sales Return

Critical judgements in calculating amounts

When a customer has a right to return the product within a given period, the Company recognizes a provision for returns Rs. 1,808.64 lakhs as at March 31, 2017 (March 31, 2016 - Rs. 1,513.62 lakhs, April 1, 2015 - Rs. 1,393.25 lakhs). This is measured based on the previous history of sales return. Revenue is adjusted for the expected value of the returns and cost of sales & Inventory are adjusted for the value of the corresponding goods to be returned.

Note 2 : Employee Benefit Obligations

As required by IND AS 19 ''Employee benefits'' the disclosures are as under :

(i) Leave obligations

The leave obligations cover the Company''s liability for sick and earned leave.

The amount of the provision of Rs. 1 73.23 lakhs (March 31, 2016 - Rs. 115.73 lakhs, April 1, 2015 - Rs. 86.38 lakhs) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months.

The following amounts reflect leave that is not expected to be taken or paid within the next 12 months.

(ii) Post-employment obligations

a) Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognized funds in India. The Company maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

(iii) Defined contribution plans

a. Provident Fund

The Company also has certain defined contribution plans. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognized during the period towards defined contribution plan is Rs. 1,119.77 lakhs (March 31, 2016 - Rs. 968.1 1 lakhs).

b. Superannuation

The Company contributed Rs. 61.72 lakhs (March 31, 2016 - Rs. 49.83 lakhs) to the superannuation plan. The same has been recognized in the Statement of profit and loss account under the head employee benefit expenses.

(iv) Post-Employment benefits (gratuity)

Significant estimates: actuarial assumptions and sensitivity

(v) Sensitivity analysis

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

Fair value hierarchy

Level 1 :Hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and mutual funds that have quoted price. The mutual funds are valued using the closing NAV.

Level 2 : The fair value of financial instruments that are not traded in an active market (like forward contract) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3 : If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities etc. included in level 3.

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognized and measured at fair value and (b) measured at amortized cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Note: 3 - Financial Risk Management

Financial risk management objectives and policies

The Company''s financial risk management is an integral part of how to plan and execute its business strategies. The Company''s financial risk management policy is set by the Audit Committee of the Board.

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and loans and borrowings.

The Company manages market risk through a Finance department, which evaluates and exercises independent control over the entire process of market risk management. The Finance department recommend the risk management objectives and policies, which are approved by Senior Management and the Audit Committee. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures like foreign exchange forward contracts, borrowing strategies and ensuring compliance with market risk limits and policies.

Market Risk- Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. In order to optimize the Company''s position with regards to interest income and interest expenses and to manage the interest rate risk, finance department performs a comprehensive corporate interest rate risk management policy by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.

According to the Company interest rate risk exposure is only for floating rate borrowings. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management''s assessment of the reasonably possible change in interest rates.

Market Risk- Foreign currency risk.

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to USD, EURO, GBP and AUD. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the Company''s functional currency (Rs.). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimize the volatility of the Rs. cash flows of highly probable forecast transactions.

The Company risk management policy is to hedge forecasted foreign currency sales for the subsequent 24 to 60 months. As per the risk management policy, foreign exchange forward contracts are taken to hedge forecasted sales.

The Company also imports certain materials and Capital Goods which are denominated in USD, EURO, GBP, CHF which exposes the Company to foreign currency risk to minimize the risk of imports, the Company hedges imports up to 12 to 60 months in advance by entering into foreign exchange forward contracts.

The spot component of forward contracts is determined with reference to relevant spot market exchange rates. The differential between the contracted forward rate and the spot market exchange rate is defined as the forward points.

Credit risk

Credit risk arises from the possibility that the counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses financial reliability of customers and other counter parties, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of financial assets. Individual risk limits are set and periodically reviewed on the basis of such information.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of default occurring on asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forward looking information such as:

- Actual or expected significant adverse changes in business,

- Actual or expected significant changes in the operating results of the counterparty,

- Financial or economic conditions that are expected to cause a significant change to the counterparty''s ability to meet its obligations,

- Significant increase in credit risk on other financial instruments of the same counterparty,

- Significant changes in the value of the collateral supporting the obligation or in the quality of the third-party guarantees or credit enhancements.

Financial assets are written off when there is no reasonable expectations of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized as income in the statement of Profit and Loss.

The Company measures the expected credit loss of trade receivables and loan from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.

Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows.

(i) Financing arrangements

The Company had access to the following undrawn borrowing facilities at the end of the reporting period:

The borrowing facilities may be drawn at any time and may be terminated by the bank without notice. Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time in future.

Note 4 : Capital Management

(a) Risk management

The Company aim to manages its capital efficiently so as to safeguard its ability to continue as a going concern and to optimize returns to our shareholders.

The capital structure of the Company is based on management''s judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. We consider the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

The Company''s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure.

The Company monitors capital on the basis of the following gearing ratio : Net debt (total borrowings net of cash and cash equivalents) divided by Total Equity.

(a) Description of segments and principal activities

The Company has only one reporting segment of its business i.e. Pharmaceutical, wherein the Company''s strategic steering committee, consisting of the chief executive officer, the chief financial officer and the manager for corporate planning, examines the Company''s performance both from a product and geographic perspective.

The steering committee primarily uses a measure of adjusted earnings before finance cost, tax, depreciation and amortization (EBITDA, see below) to assess the performance of the operating segments. However, the steering committee also receives information about the segments'' revenue and assets on a monthly basis.

(b) Adjusted EBITDA

Adjusted EBITDA excludes discontinued operations and the effects of significant items of income and expenditure which may have an impact on the quality of earnings such as restructuring costs, impairments when the impairment is the result of an isolated, non-recurring event. It also excludes the effects of share-based payments and gains or losses on financial instruments.

Interest income and finance cost are not allocated to segments, as this type of activity is driven by the central treasury function, which manages the cash position of the Company.

(c) Segment revenue

The segment revenue is measured in the same way as in the statement of profit or loss.

Note 5 : Events occurring after the reporting period Other events

Refer to note 28 for the final dividend recommended by the directors which is subject to the approval of shareholders in the ensuing annual general meeting.

Legal Case -

The Company had availed a factoring facility from a Bank who refused to pay the amount of USD 25,004 to the Company on failure of a Customer to pay for the same. The case is pending in the City Civil Court.

The Company has filed case against a Stockiest under Section 138 under Negotiable Instruments Act 1881 for Cheque Bounce of Rs. 1.50 Lakhs.

A CFA has filed a case against the Company for recovery of the amount adjusted against credit note of Rs. 1.49 lakhs the Company has disputed the Claim.

* Income Tax demand comprises of

a) TDS of Rs. 15.72 Lakhs (Previous year - Rs. 21.12 Lakhs ) for Short Deduction appearing in traces.

** Sales Tax demand comprises of

a) Rs. 421.58 Lakhs (Previous year - Rs. 421.58 Lakhs) in respect of order from sales tax dept, Andhra Pradesh for classification dispute. The Company has filed an appeal before High Court which is yet to be heard.

b) Rs. 20.21 Lakhs (Previous year - Rs. 20.21 Lakhs ) as the amount of demand raised by sales tax officer for Financial Year 2007-08 and 2009-10 on account of input credit of entry tax. Company has filed appeal before Commissioner

***Excise tax demand comprises of

a) Company appeal is pending before CESTAT for wrong availment of notification on exempted goods Rs. 0.66 Lakhs (Previous year - Rs. 0.66 Lakhs).

b) Appeal pending before Dy Commissioner for classification dispute Rs. 5.04 Lakhs (Previous year - Rs. 5.04 Lakhs).

c) Appeal pending before CESTAT for classification dispute Rs. NIL (Previous year - Rs. 2.71 Lakhs).

d) CENVAT credit on input service Rs. 91.97 Lakhs (Previous year - Rs. 91.97 Lakhs), appeal pending before CESTAT.

e) Company has Filed an appeal before CESTAT for valuation of physician sample Rs.1.25 Lakhs (Previous year - Rs. 1.25 Lakhs).

f) Company appeal is pending before Divisional Dy. Commissioner for wrong availment of CENVAT credit Rs. 0.79 Lakhs (Previous year - Rs. 0.79 Lakhs ).

g) Central excise department is in appeal before Supreme Court for Differential duty on intermixture of vitamins / minerals amounting to Rs. 2.91 Lakhs (Previous year - Rs. 2.91 Lakhs).

h) CENVAT credit on input service Rs. 247.21 Lakhs (Previous year - Rs. 247.21 Lakhs), appeal pending before Commissioner of Service Tax.

i) Company appeal is pending before CESTAT for CENVAT credit availment on physician sample amounting to Rs. 0.20 Lakhs (Previous year - Rs. 0.20 Lakhs).

j) Central excise department is in appeal at Supreme Court for valuation of physician sample Rs. 11.20 Lakhs (Previous year - Rs. 11.20 Lakhs ).

k) Rs. 279.55 Lakhs (Previous year - Rs. 279.55 Lakhs) pending before Commissioner of Central Excise Raigad Commissionerate for Exempted product- Allopurinol Value Based Duty Reversal.

Note 6:

Related Party Disclosure as required by Ind AS 24.

Note 7:

Previous year''s figures have been regrouped and reclassified wherever necessary.

Note 8 : First-time adoption of Ind AS Transition to Ind AS

This is the Company''s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended March 31, 2017, the comparative information presented in these financial statements for the year ended March 31, 2016 and in the preparation of an opening Ind AS balance sheet at April 1, 2015 (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 the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous Indian GAAP). An explanation of how the transition from previous IGAAP 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

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous IGAAP to Ind AS.

A.1 Ind AS optional exemptions

A.1.1 Cumulative translation differences

Ind AS 101 permits cumulative translation gains and losses to be reset to zero at the transition date. This provides relief from determining cumulative currency translation differences in accordance with Ind AS 21 from the date a subsidiary or equity method investee was formed or acquired. The Company elected to reset all cumulative translation gains and losses to zero by transferring it to opening retained earnings at its transition date.

A.1.2 Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous IGAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and investment property covered by Ind AS 40 Investment Properties.

Accordingly, the Company has elected to measure all of its property, plant and equipment, intangible assets and investment property at their previous IGAAP carrying value.

A.1.3 Designation of previously recognized financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances at the date of transition to Ind AS.

The Company has elected to apply this exemption for its investment in equity investments

A.1.4 Leases

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material.

The Company has elected to apply this exemption for such contracts/arrangements.

A.2.2 Estimates

An entity''s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous IGAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at April 1, 2015 are consistent with the estimates as at the same date made in conformity with previous IGAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous IGAAP:

Investment in equity instruments carried at FVPL or FVOCI;

Investment in debt instruments carried at FVPL; and

Impairment of financial assets based on expected credit loss model.

B: Reconciliations between previous IGAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous IGAAP to Ind AS.

C: Notes to first-time adoption:

9: Fair valuation of investments

Under the previous IGAAP, investments in equity instruments and mutual funds were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments (other than equity instruments designated as at FVOCI) have been recognized in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended March 31, 2016. This increased the retained earnings by Rs. 47.20 lakhs as at March 31, 2016 (April 1, 2015 - NIL ).

10: Deferred tax

Deferred tax have been recognized on the adjustments made on transition to Ind AS.

11: Borrowings

Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method.

Under previous IGAAP, these transaction costs were charged to profit or loss as and when incurred. Accordingly, borrowings as at March 31, 2016 have been reduced by Rs. 56.41 lakhs (April 1, 2015 - Rs. 23.61 lakhs) with a corresponding adjustment to retained earnings. The total equity increased by an equivalent amount. The profit for the year ended March 31, 2016 increased by Rs. 36.29 lakhs as a result of the additional interest expense.

12: Proposed dividend

Under the previous IGAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend including dividend distribution tax was recognized as a liability. Under Ind AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend including dividend distribution tax of Rs. 221.83 lakhs as at March 31, 2016 (April 1, 2015 -Rs. 1,774.56 lakhs) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

13 : Excise duty

Under the previous IGAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended March 31, 2016 by Rs. 1,003.37 lakhs. There is no impact on the total equity and profit.

14 : Cash Discount

Under previous IGAAP, cash discount amounting to Rs. 111.64 lakhs was recognised as part of other expenses which has been adjusted against the revenue under Ind AS during the year ended March 31, 2016. There was no impact on the total equity and profit.

15: Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss. Under the previous IGAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended March 31, 2016 reduced by Rs. 19.40 lakhs. There is no impact on the total equity as at March 31, 2016.

16 : Assets classified as held for sale

In the year 2015-16, the Company announced its intention to sale its Tarapur plant and initiated an active program to locate a buyer. Under previous IGAAP, the concept of disposal group held for sale does not exist. Accordingly, assets and liabilities of disposal group have not been presented as held for sale. The Company has disclosed property, plant and equipment held for sale under ''Current assets'' in accordance with AS 10 Accounting for Fixed Assets.

Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations requires disposal group to be identified as held for sale if the carrying amount will recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. Ind AS 105 lays down detailed guidelines and criteria in this regard. Based on the assessment performed by the management, it has been determined that the plant held at Tarapur should be presented as held for sale under Ind AS. Consequently, the assets of disposal group held for sale have been presented separately from the other assets respectively in the balance sheet. There is no impact on the total equity or profit as a result of this adjustment

Based on above, the following assets and liabilities were classified as held for sale as at March 31, 2016:

17: Retained earnings

Retained earnings as at April 1, 2015 has been adjusted consequent to the above Ind AS transition adjustments.

18: Other comprehensive income

Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous IGAAP.

19 : Provision for Sales Return & Cost of Goods Sold

The Company has provided for sales return @ 3.4% on the domestic sales based on average sales returns of the last 3 years. The Company has, therefore, recognized revenue on this transaction with a corresponding provision against revenue for estimated returns. Accordingly, short term provisions as at March 31, 2016 have been increased by Rs. 1,525.99 lakhs (April 1, 2015 - Rs. 1,393.26 lakhs) with a corresponding adjustment to retained earnings. The total equity reduced by an equivalent amount. The profit for the year ended March 31, 2016 reduced by Rs. 132.72 lakhs as a result of sales provision (net).

Cost on goods sold has been created on saleable returns. Accordingly, inventory have been increased by Rs. 149.99 lakhs (April 1, 2015 - Rs. 115.84 lakhs) with a corresponding adjustment to retained earnings. The total equty increased by an equivalent amount. The profit for the year ended March 31, 2016 increased by Rs. 34.15 lakhs.

20 : Mark to Market Gain / (Loss) (MTM)

Mark to Market Gain (Net of loss) have been accounted in books. Accordingly, Other financial assets have been reduced by Rs. 239.74 lakhs (April 1, 2015 - Rs. 436.20 lakhs) with a corresponding adjustment to retained earnings. The total equity increased by an equivalent amount. The profit for the year ended March 31, 2016 reduced by Rs. 196.45 lakhs.

21 : Property, Plant & Equipment

Depreciation has been created on lease hold land on the basis of its lease terms. Accordingly, Property, plant & equipment have been reduced by Rs. 143.34 lakhs (April 1, 2015 - Rs. 114.07 lakhs) with a corresponding adjustment to retained earnings. The total equity reduced by an equivalent amount. The profit for the year ended March 31, 2016 reduced by Rs. 29.27 lakhs.


Mar 31, 2016

1. CORPORATE INFORMATION

Indoco Remedies Limited (the Company) is a public Limited Company domiciled in India and incorporated under the provision of the Companies Act, VII of 1913. Its Shares are listed on two stock exchanges in India. Indoco Remedies Limited is engaged in the manufacturing and marketing of Formulations (Finished Dosage Forms) and Active Pharmaceutical Ingredients (APIs). The Company caters to both Domestic and International markets. The Company has three wholly owned subsidiaries Xtend Industrial Designers and engineers Pvt Ltd, Indoco Pharmchem Ltd and Indoco Remedies Singapore PTe Ltd.

Note 2:

Tax deducted at source from Other Income consists of:

Rs. 34.80 lakhs on account of Professional or Tech Services (Previous year Rs. 17.11 lakhs)

Rs. 4.15 lakhs on account of Interest received (Previous year Rs. 3.86 lakhs)

Rs. 2.18 lakhs on account of Contracts (Previous year Rs. 6.77 lakhs)

Note 3:

Segment Reporting: Primary Segment:

The Company has only one business segment i.e. Pharmaceutical.

Note 4:

The Company is exposed to risk associated with foreign currency fluctuations as well as interest rate. The company has entered into forward contract and derivative contracts to hedge the interest rate risk & currency risk. However the company does not use these contracts for any speculative purposes.

The outstanding position of the forward contracts as at march 31, 2016 is Rs. 9,193.33 Lakhs (Previous Year Rs. 6,654.88 Lakhs) with Banks. Category wise break up is given here under:

Note 5:

The company has opted to avail the option provided under paragraph 46A of AS 11: The effects of changes in Foreign Exchange Rates inserted vide notification dated December 29, 2011. Consequently, the foreign exchange differences on long term Foreign Currency monetary item is accumulated in a "Foreign Currency monetary item Translation Difference Account" and accordingly exchange loss on long term foreign currency loans have been amortised over the balance period of such loans.

Note 6:

Related Party Disclosure as required by Accounting Standard 18 issued by the Institute of Chartered Accountants of India.

I. Related Parties

(A) enterprises that control or are controlled by the reporting company: Holding Companies NIL

Subsidiary Companies

I) Xtend Industrial Designers & engineers Pvt Ltd.

II) Indoco Pharmchem Limited

III) Indoco Remedies Singapore PTe Ltd. Fellow Subsidiaries NIL

(B) Associates and Joint Ventures of reporting company:

Associates Indoco Analytical Solution LLP

Joint Ventures NIL

(C) (i) Individuals owning and having control of the reporting company

Mr. Suresh G. Kare, Mrs. Aruna S. Kare, Ms. Aditi Panandikar, Mrs. madhura Ramani.

(ii) Their relatives:

Dr. milind Panandikar, Dr. Anup Ramani, Mr. Ramnath Kare, Mrs. Suman Naik, mrs. Sudha Pai, Mrs. Laxmi Bambolkar, Mrs. Pratima Vaidya, Mrs. Amita Rajadhyaksha, Mrs. meera Karnik.

(D) (i) Key management Personnel :

Mr. Suresh g. Kare, Ms. Aditi Panandikar, Mr. Sundeep V. Bambolkar.

(ii) Their Relatives :

Mrs. Aruna S. Kare, Mrs. madhura A. Ramani, Mr. Ramnath Kare, Mrs. Suman Naik, Mrs. Sudha Pai, Mrs. Laxmi Bambolkar, Dr. milind Panandikar, Mrs. Neeta Bambolkar, Mr. Vasant Bambolcar,

Ms. manali Bambolkar, Mr. Paresh Bambolkar.

(e) enterprises controlled by key management personnel :

SPA Holdings Pvt. Ltd., Shanteri Investments Pvt. Ltd., Indoco Capital markets Ltd., A K Services, Suresh Kare Foundation, Warren generics s.r.o, Indoco Remedies Singapore Pte Ltd.

Note 7:

Pursuant to the enactment of Companies Act 2013, the company has applied the estimated useful life as specified in Schedule II, except in certain assets as disclosed in the Accounting policy on Depreciation, Amortisation and depletion. Accordingly the unamortised carrying value is being depreciated / amortised over the revised / remaining useful lives. The written down value of Fixed Assets whose lives have expired at 1st April,2014 have been adjusted net of tax , in the opening balance of Profit and Loss account amounting to Rs. 471.40 Lakhs in the previous year.

Note 8:

Previous year''s figures have been regrouped and reclassified wherever necessary.


Mar 31, 2015

1. CORPORATE INFORMATION

Indoco Remedies Limited (the Company) is a public Limited Company domiciled in India and incorporated under the provision of the Companies Act, VII of 1913. Its Shares are listed on two stock exchanges in India. Indoco Remedies Limited is engaged in the manufacturing and marketing of Formulations (Finished Dosage Forms) and Active Pharmaceutical Ingredients (APIs). The Company caters to both domestic and International markets Company has two wholly owned subsidiaries Xtend Industrial Designers and Engineers Pvt Ltd (formerly known as Indoco Industrial Designers & Engineers Pvt.Ltd.) and Indoco Pharmchem Ltd.

b) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. All equity shares of the Company rank pari passu in all respects including the right to dividend. The Company declares and pays dividends 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 ended 31 March 2015, the amount of per share dividend recognized as distributions to equity shareholders was Rs. 1.60 on the face value of Rs. 2/- (Previous year Rs. 1.40 on the face value of Rs. 2/-) of the Company.

In the event of winding-up, subject to the rights of holders of shares issued upon special terms and conditions, the holders of equity shares shall be entitled to receive remaining assets, if any, in proportion to the number of shares held at the time of commencement of winding-up.

(Rs.In lakhs) As at 31st As at 31st March, 2015 March, 2014

Note 3 :

Contingent Liabilities not provided for:

A) Matters under dispute

i) Sales Tax (Rs. 163.03 lakhs has been paid under protest Previous year Rs. 118.08 lakhs) ** 441.79 396.83

ii) Excise / Service Tax *** 363.94 363.92

iii) Income Tax 23.34 134.84

B) Bank Guarantees 81.60 98.47

C) Letters of Credit 162.12 538.19

D) Estimated amount of contracts remaining to be executed on Capital Account, net of advances of Rs. 341.00 lakhs (Previous year Rs. 201.64 lakhs 637.32 776.13

E) Corporate Guarantee given to Bank on behalf of the Subsidiary 200.00 200.00

Legal Case - The Company had availed a factoring facility from a Bank who refused to pay the amount of USD 25,004 to it on failure of a Customer to pay for the same. The case is pending in the City Civil Court.

* Income Tax demand comprises of

a) TDS of Rs. 15.88 Lakhs (Previous year - Rs. 127.38 Lakhs ) for Short Deduction appearing in traces.

b) Penalty demand of Rs. 7.46 Lakhs (Previous year - Rs. 7.46 Lakhs ) raised by assessing officer, as per order under section 271(1)(c) of the Income Tax Act 1961 due to disallowance pertaining to depreciation on land for Assessment Year 2002-03, 2003-04. Company is in appeal before ITAT against said order.

** Sales Tax demand comprises of

a) Rs. 421.58 Lakhs (Previous year - Rs. 375.23 Lakhs ) (Rs. 163.03 Lakhs has been paid under protest Previous year Rs.118.08 Lakhs ) in respect of order from sales tax dept, Andhra Pradesh for classification dispute. The Company has filed an appeal before High Court which is yet to be heard.

b) Rs. 20.21 Lakhs (Previous year - Rs. 20.21 Lakhs ) as the amount of demand raised by sales tax officer for Financial Year 2007-08 and 2009-10 on account of input credit of entry tax. Company has filed appeal before Commissioner.

c) Rs. Nil (Previous year - Rs. 1.39 Lakhs) as the amount of demand raised by sales tax officer for year 2009-10 on account of adjustment of refund. The Company has filed an appeal with Commissioner appeals. During the current year the ruling has been issued in favour of the Company.

***Excise tax demand comprises of

a) Company appeal is pending before CESTAT for wrong availment of notification on exempted goods Rs. 0.66 Lakhs (Previous year - Rs. 0.66 Lakhs).

b) Appeal pending before Dy Commissioner for classification dispute Rs. 5.04 Lakhs ( Previous year - Rs. 5.04 Lakhs).

c) Appeal pending before CESTAT for classification dispute Rs. 2.71 Lakhs (Previous year - Rs. 2.71 Lakhs).

d) CENVAT credit on input service Rs. 91.97 Lakhs (Previous year - Rs. 91.97 Lakhs ), appeal pending before CESTAT.

e) Company has Filed an appeal before CESTAT for valuation of physician sample Rs. 1.25 Lakhs (Previous year - Rs. 1.25 Lakhs).

f) Company appeal is pending before Divisional Dy. Commissioner for wrong availment of CENVAT credit Rs. 0.79 Lakhs (Previous year - Rs. 0.79 Lakhs ).

g) Central excise department is in appeal before Supreme Court for Differential duty on intermixture of vitamins/ minerals amounting to Rs. 2.91 Lakhs (Previous year - Rs. 2.91 Lakhs).

h) CENVAT credit on input service Rs. 247.21 Lakhs (Previous year - Rs. 247.21 Lakhs), appeal pending before Commissioner of Service Tax.

i) Company appeal is pending before CESTAT for CENVAT credit availment on physician sample amounting to Rs. 0.20 Lakhs (Previous year - Rs. 0.20 Lakhs).

j) Central excise department is in appeal at Supreme Court for valuation of physician sample Rs. 11.20 Lakhs (Previous year - Rs. 11.20 Lakhs).

Note 4 :

Tax deducted at source from Other Income consists of:

Rs. 17.11 lakhs on account of Professional or Tech Services ( Previous year Rs. 13.85 lakhs) Rs. 3.86 lakhs on account of Interest received (Previous year Rs. 5.30 lakhs) Rs. 6.77 lakhs on account of Contracts (Previous year Rs. 2.23 lakhs)

Note 5 :

A) The Company is exposed to risk associated with foreign currency fluctuations as well as interest rate. The Company has entered into forward contract and derivative contracts to hedge the interest rate risk & currency risk. However the Company does not use these contracts for any speculative purposes.

B) Some of the ECB loans availed in JPY & SGDs have been converted into USD by entering into derivative contracts. The company has also entered into Interest Rate Swap agreements for all the ECBs. Thus, any cross currency movement in USD / JPY & USD / SGD as well as any movement in LIBOR has no impact on the future financials of the Company.

Note 6 :

The Company has opted to avail the option provided under paragraph 46A of AS 11: The Effects of changes in Foreign Exchange Rates inserted vide notification dated 29th December, 2011. Consequently, the foreign exchange differences on long term Foreign Currency Monetary item is accumulated in a "Foreign Currency Monetary item Translation Difference Account" and accordingly exchange loss on long term foreign currency loans have been amortised over the balance period of such loans.

Note 7 :

Related Party Disclosure as required by Accounting Standard 18 issued by the Institute of Chartered Accountants of India.

I. Related Parties

A. Enterprises that control or are controlled by the reporting company:

Holding Companies Nil

Subsidiary Companies I) Xtend Industrial Designers & Engineers Pvt. Ltd.

II) Indoco Pharmchem Limited.

Fellow Subsidiaries NIL

B. Associates and Joint Ventures of reporting company:

Associates Indoco Analytical Solution LLP

Joint Ventures Nil

C. (i) Individuals owning and having control of the reporting company

Mr. Suresh G. Kare, Mrs. Aruna S. Kare, Ms. Aditi Panandikar, Mrs. Madhura A. Ramani (ii) Their relatives :

Dr. Milind Panandikar, Dr. Anup Ramani, Mr. Ramnath Kare, Mrs. Suman Naik, Mrs. Sudha Pai, Mrs. Laxmi Bambolkar, Mrs. Pratima Vaidya, Mrs. Amita Rajadhyaksha, Mrs. Meera Karnik

D. (i) Key Management personnel:

Mr. Suresh G. Kare, Ms. Aditi Panandikar, Mr. Sundeep V. Bambolkar (ii) Their relatives:

Mrs. Aruna S. Kare, Mrs. Madhura A. Ramani, Mr. Ramnath Kare, Mrs. Suman Naik, Mrs Sudha Pai, Mrs. Laxmi Bambolkar, Dr Milind Panandikar, Mrs. Neeta Bambolkar, Mr. Vasant Bambolcar, Ms. Manali Bambolkar, Mr. Paresh Bambolkar

E. Enterprises controlled by key management personnel:

SPA Holdings Pvt. Ltd., Shanteri Investments Pvt. Ltd., Indoco Capital Markets Ltd., A K Services, Suresh Kare Foundation, Warren Generics s.r.o

The above information regarding Micro Enterprises and small Enterprises has been determined on the basis of information available with the Company. No interest has been accrued on delayed payments, if any.

Note 8 :

Pursuant to the enactment of Companies Act 2013, the Company has applied the estimated useful life as specified in Schedule II, except in certain assets as disclosed in the Accounting policy on Depreciation, Amortisation and depletion. Accordingly the unamortised carrying value is being depreciated / amortised over the revised / remaining useful lives. The written down value of Fixed Assets whose lives have expired at at 1st April, 2014 have been adjusted net of tax , in the opening balance of Profit and Loss account amounting to Rs. 471.40 Lakhs.

Note 9 :

On 21st April,2015 there was a fire at our Indore Central Warehouse, Samples and Goods to the tune of Rs. 6.65 Crores has been damaged in the fire. The same were adequately insured. The Company has lodged a claim with Insurance Company.

Note 10 :

On 6th April,2015 the Company acquired the Clinical Research organisation (CRO) a division from Piramal Enterprise Limited.

Note 11 :

Previous year''s figures have been regrouped and reclassified wherever necessary.


Mar 31, 2013

1. CORPORATE INFORMATION

Indoco Remedies Limited (the Company) is a Public Limited Company domiciled in India and incorporated under the provisions of the Companies Act, VII of 1913. Its Shares are listed on two stock exchanges in India. Indoco Remedies Limited is engaged in the manufacturing and marketing of Pharmaceutical Formulations (Finished Dosage Forms) and Active Pharmaceutical Ingredients (APIs). The Company caters to both domestic and International markets. Company has two subsidiaries Indoco Industrial Designers & Engineers Pvt.Ltd. and Indoco Pharmchem Ltd.

Note 2 :

Tax deducted at source from Other Income consists of:

Rs. 5.65 lakhs on account of Professional or Tech Services ( Previous year Rs. 5.80 lakhs) Rs. 3.92 lakhs on account of Interest received (Previous year Rs. 15.27 lakhs) Rs. 0.95 lakhs on account of Contracts (Previous year Rs. 0.38 lakhs)

Note 3 :

Segment Reporting:

Primary Segment:

The Company has only one business segment i.e. Pharmaceutical.

Note 4 :

A) The Company is exposed to risk associated with foreign currency fluctuations as well as interest rate. The company has entered into forward contract and derivative contracts to hedge the interest rate risk & currency risk. However the company does not use these contracts for any speculative purposes.

Note 5 :

Changes in the Capital Structure

The Board of Directors in their meeting held on 29th March, 2012 proposed to subdivide one equity share having face value of Rs. 10/- each into five equity shares having face value of Rs. 2/- each fully paid up. The Board of Directors also proposed to enhance the authorised capital from present Rs. 1,800 lakhs to Rs. 2,500 lakhs and also to issue Bonus shares in proportion to one equity share of Rs. 2/- each fully paid for every two shares held by existing shareholders.

The members of the Company have given their approval to the above proposals by Postal Ballot on 08th May, 2012 and the allotment of the bonus shares was done on 21st May 2012.

Pursuant to the above approvals by the members, the Company has issued Bonus share by capitalising Securities Premium account. The Equity share capital as on date has been increased to Rs. 1,843.01 lakhs consisting of 9,21,50,355 Equity shares of Rs. 2/- each fully paid up.

Note 6 :

The company has opted to avail the option provided under paragraph 46A of AS 11: The Effects of changes in Foreign Exchange Rates inserted vide notification dated December,29 2011. Consequently, the foreign exchange differences on long term Foreign Currency Monetary item is accumulated in a "Foreign Currency Monetary item Translation Difference Account" and accordingly exchange loss on long term foreign currency loans have been amortised over the balance period of such loans.

Note 7 :

Related Party Disclosure as required by Accounting Standard 18 issued by the Institute of Chartered Accountants of India.

I. Related Parties

A. Enterprises that control or are controlled by the reporting company:

Holding Companies Nil

Subsidiary Companies I) Indoco Industrial Designers & Engineers Pvt. Ltd.

II) Indoco Pharmchem Limited.

Fellow Subsidiaries NIL

B. Associates and Joint Ventures of reporting company:

Associates Nil

Joint Ventures Nil

C. (i) Individuals owning and having control of the reporting company

Mr. Suresh G. Kare, Mrs. Aruna S. Kare, Mrs. Aditi Panandikar, Mrs. Madhura A. Ramani (ii) Their relatives :

Dr. Milind Panandikar, Dr. Anup Ramani, Mr. Ramnath Kare, Mrs. Suman Naik, Mrs. Sudha Pai, Mrs. Laxmi Bambolkar, Mrs. Pratima Vaidya, Mrs. Amita Rajadhyaksha, Mrs. Meera Karnik

D. (i) Key Management personnel:

Mr. Suresh G. Kare, Mrs. Aditi Panandikar, Mr. Sundeep V. Bambolkar

(ii) Their relatives:

Mrs. Aruna S. Kare, Mrs. Madhura A. Ramani, Mr. Ramnath Kare, Mrs. Suman Naik, Mrs Sudha Pai, Mrs. Laxmi Bambolkar, Dr Milind Panandikar, Mrs. Neeta Bambolkar, Mr. Vasant Bambolcar, Ms. Manali Bambolkar, Mr. Paresh Bambolkar

E. Enterprises controlled by key management personnel:

SPA Holdings Pvt Ltd., Shanteri Investments Pvt Ltd., Indoco Capital Markets Ltd., A K Services, Suresh Kare Indoco Foundation

Note 8 :

During the year the Company has subscribed to 15,015 shares of Indoco Industrial Designers and Engineers Private Limited face Value Rs. 10/- at a premium of Rs. 140/- per share. Pursuant to the Issue Indoco Industrial Designers and Engineers Private Limited became a subsidiary of Indoco Remedies Limited.

Note 9 :

During the year the Company has also subscribed to 50,000 shares of Indoco Pharmchem Limited face Value Rs. 10/- per share at par. Pursuant to the Issue Indoco Pharmchem Limited became a subsidiary of Indoco Remedies Limited.

Note 10 :

Previous year''s figures have been regrouped and reclassified wherever necessary.


Mar 31, 2012

1. CORPORATE INFORMATION

Indoco Remedies Limited (the Company) is a Public Limited Company domiciled in India and incorporated under the provision of the Companies Act, VII of 1913. Its Shares are listed on two stock exchanges in India. Indoco Remedies Limited is engaged in the manufacturing and marketing of Pharmaceutical Formulations (Finished Dosage Forms) and Active Pharmaceutical Ingredients (APIs). The Company caters to both domestic and International markets.

a) Terms/rights attached to equity shares

The company has only one class of equity shares having a par value of Rs 10 per share (Refer Note No. 37 for disclosure regarding post balance sheet event). Each holder of equity shares is entitled to one vote per share. All equity shares of the Company rank pari passu in all respects including the right to dividend. The company declares and pays dividends 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 ended 31st March 2012, the amount of per share dividend recognized as distributions to equity shareholders was Rs 1.10 on the face value of Rs 2/- per share (Previous year Rs 8/- on the face value of Rs 10/- per share.)

In the event of winding-up, subject to the rights of holders of shares issued upon special terms and conditions, the holders of equity shares shall be entitled to receive remaining assets, if any, in proportion to the number of shares held at the time of commencement of winding-up.

(Rs Lakhs) Current Year Previous Year As at 31.03.2012 As at 31.03.2011

Note 2 :

Contingent Liabilities not provided for:

A) Matters under dispute

i) Sales Tax (Rs 100.87 lakhs has been paid under protest Previous year Rs 72.65 lakhs) 203.59 189.81

ii) Excise / Service Tax 365.78 370.58

iii) Income Tax 258.22 564.09

iv) In respect of claims made against the Company not acknowledged as debts (Labour matters) - 6.12

B) Bank Guarantees 245.09 150.85

C) Letters of Credit 523.77 564.84

D) Estimated amount of contracts remaining to be executed on Capital Account, net of advances of Rs 26.21 lakhs (Previous year Rs 2,163.32 lakhs) 598.86 2,985.02

Note 3 :

Company's proposal to the "Department of Scientific and Industrial Research" (DSIR) "Ministry of Science & Technology", Government of India for financial support under TDDP project of DSIR has been approved by DSIR in the previous year. Company has received Rs 20 lakhs as an advance under the said project. The said advance is grouped under the head "Non-Current Liabilities" - Other Long Term Liabilities at "Note 7" forming part of the Balance Sheet.

Note 4 :

Tax deducted at source from Other Income consists of:

Rs 7.40 lakhs on account of Professional or Technical Services ( Previous year Rs 4.45 lakhs)

Rs 15.25 lakhs on account of Interest received (Previous year Rs 29.55 lakhs)

B) Some of the ECB loans availed in JPY & SGDs have been converted into USD by entering into derivative contracts. The company has also entered into Interest Rate Swap agreements for all the ECBs. Thus, any cross currency movement in USD / JPY & USD / SGD as well as any movement in LIBOR has no impact on the future financials of the company.

Note 5 :

Changes in the Capital Structure post Balance Sheet date

The Board of Directors in their meeting held on 29th March, 2012 proposed to subdivide one equity share having face value of Rs 10/- each into five equity shares having face value of Rs 2/- each fully paid up. The Board of Directors also proposed to enhance the authorised capital from present Rs 1,800 lakhs to Rs 2,500 lakhs and also to issue Bonus shares in proportion to one equity share of Rs 2/- each fully paid for every two shares held by existing shareholders.

The members of the Company have given their approval to the above proposals by Postal Ballot on 08th May, 2012 and the allotment of the bonus shares was done on 21st May, 2012.

Pursuant to the above approvals by the members, the Company has issued Bonus share by capitalising Securities Premium account. The Equity share capital as on the reporting date has been increased to Rs 1,843.01 lakhs consisting of 9, 21, 50,355 Equity shares of Rs 2/- each fully paid up.

Accordingly, the calculation of proposed dividend has been done on the entire new share capital of 9,21,50,355 equity shares of Rs 2/- each fully paid up.

Note 6 :

During the year unclaimed share application money amounting to Rs 7.60 lakhs (Previous Year NIL) has been transferred to Investor Education and Protection Fund.

Note 7 :

Donation includes amount of Rs 49,00,000 paid to South Goa District Congress (I) Committee and Rs10,00,000 to Goa Pradesh Committee Previous Year (Rs Nil ).

Note 8 :

The company has opted to avail the option provided under paragraph 46A of AS 11 regarding the effects of Effects of changes in Foreign Exchange Rates inserted vide notification dated December,29 2011. Consequently, the foreign exchange differences on long term Foreign Currency Monetary item is accumulated in a "Foreign Currency Monetary item Translation Difference Account" and accordingly exchange loss on long term foreign currency loans have been amortised over the balance period of such loans.

Note 9 :

Related Party Disclosure as required by Accounting Standard 18 issued by the Institute of Chartered Accountants of India.

I. Related Parties

A. Enterprises that control or are controlled by the reporting company:

Holding Companies Nil

Subsidiary Companies Nil

Fellow Subsidiaries Nil

B. Associates and Joint Ventures of reporting company:

Associates Nil

Joint Ventures Nil

C. (i) Individuals owning and having control of the reporting company:

Mr. Suresh G. Kare, Mrs. Aruna S. Kare, Ms. Aditi Panandikar, Mrs. Madhura A. Ramani (ii) Their relatives :

Dr. Milind P. Panandikar, Dr. Anup Ramani, Mr. Ramnath Kare, Mrs. Suman Naik, Mrs. Sudha Pai, Mrs. Laxmi Bambolkar, Mrs. Pratima Vaidya, Mrs. Amita Rajadhyaksha, Mrs. Meera Karnik

D. (i) Key Management personnel:

Mr. Suresh G. Kare, Ms. Aditi Panandikar, Mr. Sundeep V.Bambolkar (ii) Their relatives:

Mrs. Aruna S. Kare, Mrs. Madhura A. Ramani, Mr. Ramnath Kare, Mrs. Suman Naik, Mrs Sudha Pai, Mrs. Laxmi Bambolkar, Dr Milind P. Panandikar, Mrs. Neeta Bambolkar, Mr. Vasant Bambolcar, Ms. Manali Bambolkar, Mr. Paresh Bambolkar

E. Enterprises controlled by key management personnel:

SPA Holdings Pvt Ltd., Shanteri Investments Pvt Ltd., Indoco Industrial Designers and Engineers Pvt. Ltd., Indoco Capital Markets Ltd., A K Services, Suresh Kare Indoco Foundation

Note 10 :

Miscellaneous Expenditure to the extent not written off includes Rs. Nil (previous year Rs. 1.40 lakhs on account of preliminary expenses incurred by erstwhile M/s. Shree Herbal Technologies Ltd.)

Note 11 :

Previous year's figures have been regrouped and reclassified wherever necessary.


Mar 31, 2011

Current Year Previous Year (Rs.in Lakhs) (fin Lakhs)

1) Contingent Liabilities Not Provided For :

(a) Matters under dispute

(i) Sales Tax 189.81 199.48

(Rs. 72.65 lakhs has been paid under protest Previous year Rs. 72.65 lakhs)

(ii) Excise / Service Tax 370.58 370.58

(iii) Income Tax

- Where the Company is in appeal 564.09 120.27 (Rs. 48.30 lakhs has been paid under protest Previous year Rs. 48.30 lakhs)

- Where the department is in appeal 263.98 269.97

(iv) In respect of claims made against the Company not acknowledged as debts (Labour matters) 6.12 3.57

(b) Bank Guarantees 150.85 205.82

(c) Letters of Credit 564.84 792.24

(d) Estimated amount of contracts remaining to be executed on Capital Account, net of advances of Rs. 2,163.32 lakhs (Previous year Rs. 338.41 lakhs) 2,985.02 1,056.30

(e) Discounting of debtors to the extent not actually realized on Balance Sheet date Nil 70.33

2) Research & Development expenses include salary & wages, chemicals/materials consumed, electricity, travel, repairs, insurance premium and such similar expenses.

3) Companys proposal to the "Department of Scientific and Industrial Research" ( DSIR ) "Ministry of Science & Technology", Government of India for financial support under TDDP project of DSIR has been approved by the DSIR during the year and Company has received Rs. 20 Lakhs as an advance under the said project. The said advance is grouped under the head "Other Liabilities" at "Schedule I" forming part of the Balance Sheet.

4) Tax deducted at source from Other Income consists of: Rs. 4.45 Lakhs on account of Professional or Tech Services(Previous year Rs. 8.87 Lakhs) ^ 29.55 Lakhs on account of Interest received (Previous year Rs. 20.75 Lakhs)

5) A) The Company is exposed to risk associated with foreign currency fluctuations as well as interest rate. The Company has entered into forward contracts and derivative contracts to hedge the interest rate risk and currency risk. These transactions are in consistence with the Companys Risk Management Policy. However the company does not use these contracts for any speculative purposes.

B) Out of total ECB loans, part of ECB is availed in JPY & SGDs which are converted into USD by entering into derivative contracts. The Company has also entered into Interest Rate Swap agreements for all the ECBs. Thus, any cross currency movement in USD/JPY & USD/SGD as well as any movement in LIBOR has no impact on the future financials of the company.

6) Miscellaneous Expenditure to the extent not written off includes Rs. Nil (Previous year Rs. 3.64 Lakhs) on account of product registration charges and Rs. 1.40 Lakhs (Previous year Rs. 1.57 Lakhs) on account of preliminary expenses incurred by erstwhile M/s. Shree Herbal Technologies Ltd.

7) Related Party Disclosures as required by Accounting Standard 18 issued by the Institute of Chartered Accountants of India.

I Related Parties

A. Enterprises that control or are controlled by the reporting company Holding Companies Nil Subsidiary Companies Nil Fellow Subsidiaries Nil

B. Associates and Joint Ventures of reporting company Associates Nil Joint Ventures Nil

C. (i) Individuals owning and having control of the reporting company

Mr. Suresh G. Kare, Mrs. Aruna S. Kare, Mrs. Aditi M. Panandikar, Mrs. Madhura A. Ramani (ii) their relatives

Dr. Milind P. Panandikar, Dr. Anup Ramani, Mr. Ramnath Kare, Mr. Ashok Kare, Mrs. Suman Naik, Mrs. Sudha Pai, Mrs. Laxmi Bambolkar, Mrs. Pratima Vaidya, Mrs. Amita Rajadhyaksha, Mrs. Meera Karnik

D. (i) Key Management personnel

Mr. Suresh G. Kare, Mrs. Aditi Kare Panandikar, Mr. Sundeep Bambolkar, Mr. F. X. Coutinho (Part of the year)

(ii) their relatives :

Mrs. Aruna S. Kare, Mrs. Madhura A. Ramani, Mr. Ramnath Kare, Mr. Ashok Kare, Mrs. Suman Naik, Mrs Sudha Pai, Mrs. Laxmi Bambolkar, Dr. Milind P. Panandikar, Ms. Ivy Coutinho, Ms. Sushma Dsouza, Ms. Karen Lemos, Mr. John Coutinho, Mrs. Celine Elias, Mrs. Alice Pillai, Mrs. Neeta Bambolkar, Mr. Vasant Bambolcar, Ms. Manali Bambolkar, Mr. Paresh Bambolkar,

E. Enterprises controlled by key management personnel

SPA Holdings Pvt Ltd, Shanteri Investments Pvt Ltd, Indoco Industrial Designs and Engineers Pvt. Ltd., Indoco Capital Markets Ltd, A K Services

8) The Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures if any, relating to amounts unpaid as at the year end together with the interest paid / payable as required under the said Act have not been given.

9) Previous years figures have been regrouped and reclassified wherever necessary.


Mar 31, 2010

Current Year Previous Year Rs Lakhs Rs Lakhs

1) Contingent Liabilities Not Provided For :

(a) Matters under dispute

(i) Sales Tax 199.48 10.37 (Rs 72.65 lakhs has been paid under protest)

(ii) Excise / Service Tax....... 370.58 146.83

(iii) Income Tax.................

- Where the Company is in appeal 120.27 231.95 (Rs 48.30 lakhs has been paid under protest)

- Where the department is in appeal 269.97 436.62

(iv) In respect of claims made against the Company not acknowledged as debts (Labour matters) 3.57 5.49

(b) Bank Guarantees ........... 205.82 98.52

(c) Letters of Credit .......... 792.24 734.35

(d) Estimated amount of contracts remaining to be executed on Capital Account [Net of advances of Rs 338.41 lakhs (Previous year Rs 589.97 lakhs)] ..... 1,056.30 1,047.83

(e)Discounting of debtors to the extent not actually realized as on Balance Sheet date........ 70.33 195.08

2) Research & Development expenses include salary & wages, chemicals/materials consumed, electricity, travel, repairs, insurance premium and similar such expenses.

3) Tax deducted at source from Other Income consists of:

Rs 8.87 lakhs on account of Professional or Tech Services (Previous year Rs. 7.32 lakhs) Rs Nil on account of Job work Charges (Previous Year Rs. 0.48 lakhs) Rs 20.75 lakhs on account of Interest received (Previous Year Rs.7.78 lakhs)

4) The Companys exclusive business is manufacturing and selling of pharmaceutical products comprising of bulk drugs and formulations and therefore it is the only reportable segment as per Accounting Standard 17 on segment reporting issued by the Institute of Chartered Accountants of India. Although the Company caters to the needs of export markets, the export turnover is not significant in the context of total turnover. As such there is no reportable geographical segment.

5) The Company is exposed to various financial risks which relate to changes in exchange rates and interest rates. The Company hedges risks of the aforesaid nature using forward contracts. The outstanding position and exposure is as under:

a) As at 31 st March, 2010 the outstanding position in respect of the forward contracts is Rs.2851.88 lakhs with Banks

6) Miscellaneous Expenditure to the extent not written off includes Rs. 3.64 lakhs (Previous year Rs. 12.20 lakhs) on account of product registration charges & Rs. 1.57 lakhs (Previous year Rs. 1.75 lakhs) on account of preliminary expenses incurred by erstwhile Shree Herbal Technologies Ltd.

7) Related Party Disclosure as required by Accounting Standard 18 issued by the Institute of Chartered Accountants of India.

I Related Parties

A. Enterprises that control or are controlled by the reporting company

Holding Companies Nil

Subsidiary Companies Nil

Fellow Subsidiaries Nil

B. Associates and Joint Ventures of reporting company

Associates Nil

Joint Ventures Nil

C. (i) Individuals owning and having control of the reporting company

Mr. Suresh G. Kare, Ms. Aruna S. Kare, Ms. Aditi Kare Panandikar, Ms. Madhura A. Ramani (ii) their relatives

Dr. Milind Panandikar, Dr. Anup Ramani, Mr. Ramnath Kare, Mr. Ashok Kare, Ms. Suman Naik, Ms. Sudha Pai, Ms. Laxmi Bambolkar, Ms. Pratima Vaidya, Ms. Amita Rajadhyaksha, Ms. Meera Karnik

D. (i) Key Management personnel

Mr. Suresh C. Kare, Ms. Aditi Kare Panandikar, Mr. FX Coutinho, Mr. Sundeep V. Bambolkar (ii) their relatives :

Ms. Aruna S. Kare, Ms. Madhura A. Ramani, Mr. Ramnath Kare, Mr. Ashok Kare, Ms. Suman Naik, Ms. Sudha Pai, Ms. Laxmi Bambolkar, Dr. Milind Panandikar, Ms. Ivy Coutinho, Ms. Sushma Dsouza, Ms. Karen Lemos, Mr. John Coutinho, Ms. Celine Elias, Ms. Alice Pillai, Ms. Neeta Bambolkar, Mr. Vasant Bambolcar, Ms. Manali Bambolkar,

Mr. Paresh Bambolkar

E. Enterprises controlled by key management personnel

SPA Holdings Pvt Ltd, Shanteri Investments Pvt Ltd, Indoco Global Markets Pvt Ltd, Indoco Capital Markets Ltd, and AK Services.

8) The Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures if any, relating to amounts unpaid as at the year end together with the interest paid / payable as required under the said Act have not been given.

9) Previous years figures have been regrouped and reclassified wherever necessary.

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