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Notes to Accounts of Ipca Laboratories Ltd.

Mar 31, 2023

Details of investments in subsidiary / joint venture / associate at cost

a) Ipca Pharmaceuticals, Inc. USA

This wholly owned subsidiary company was incorporated under the laws of the State of New Jersey in the United States on July 10, 2003. This subsidiary company is coordinating the development and registration of formulations developed by the Company in United States of America as well as distribution of Active Pharmaceutical Ingredients (APls) manufactured by the Company in the US market. During the year 2017-18, this subsidiary acquired 90% Share capital of Pisgah Laboratories Inc. USA. Further, during the year 2018-19, this subsidiary has acquired 80% units of Bayshore Pharmaceuticals LLC, a New Jersey limited liability company (Bayshore). During the previous year, this subsidiary has acquired the remaining 20% share capital of Bayshore and with this acquisition, Bayshore is now wholly owned by Ipca Pharmaceuticals Inc., USA. During the current year Ipca has further invested in 6,000 preference shares of Ipca Pharmaceuticals. Inc. USA.

b) Ipca Laboratories (U.K.) Ltd.,U.K.

During the financial year 2003-04, the Company incorporated this wholly owned subsidiary to apply and obtain product registrations in the United Kingdom. During the year 2011-12, this subsidiary acquired 100% share capital of Onyx Research Chemicals Ltd., holding company of Onyx Scientific Ltd. During the year 2015-16, Onyx Research Chemicals Ltd., UK merged with its holding company Ipca Laboratories (UK) Ltd. and consequent to this, Onyx Scientific Ltd. has became wholly owned subsidiary of this Company. During the year 2018-19, Onyx Scientific Ltd. has acquired 10% share capital of Pisgah Laboratories Inc. USA. During the current year Ipca has further invested in 10,00,000 preference shares of Ipca Laboratories (U.K.) Ltd.,U.K.

c) Ipca Pharma Nigeria Ltd. Nigeria

During the year 2006-07, the Company acquired the entire share capital of Ipca Pharma Nigeria Ltd. Thus, Ipca Pharma Nigeria Ltd. became wholly owned subsidiary of the Company with effect from January 31,2007. The Company was incorporated as a private company in Nigeria. It commenced commercial operations in December 2001. It is engaged in importation and marketing of formulations and APIs in the Nigerian market.

d) Ipca Pharma (Australia) Pty Ltd. Australia

This subsidiary company was acquired by the Company in the year 2007-08 and is engaged in the activities of holding formulations dossier registrations with TGA, Australia and sale of pharmaceuticals manufactured by the Company in Australia. This subsidiary company has a wholly owned subsidiary in New Zealand - Ipca Pharma (NZ) Pty Ltd.

e) Ipca Pharma (NZ) Pty Ltd., New Zealand

During the year 2007-08, the Company was incorporated to hold formulation dossier registrations in New Zealand and to distribute formulations manufactured by the Company in the New Zealand market. This company is wholly owned subsidiary of Ipca Pharma (Australia) Pty Ltd.

f) Ipca Pharmaceuticals Ltd. SA de CV. Mexico

This subsidiary Company was setup during the year 2008-09 as wholly owned subsidiary of the Company to hold formulations dossier registrations and promotion of pharmaceuticals manufactured by the Company in the Mexican market. This Company is currently in the process of being closed down subject to required approval.

g) Avik Pharmaceutical Ltd., India

During the year 2013-14 the Company had acquired 49.02% of shares in Avik Pharmaceutical Ltd. Avik is manufacturing APIs, primarily Cortico Steroids and Hormones since 1980. Avik is pioneer in the manufacturing of steroids in India. Avik''s two manufacturing facilities are located at Vapi, Gujarat. During the year 2018-19, the Company has been allotted 33,000 shares under right issue. Further, during the year 2021-22, the Company has acquired additional 11,000 shares. Now Company''s holding in Avik Pharma is 50.00%.

h) Trophic Wellness Pvt. Ltd., India

Trophic Wellness Pvt. Ltd. was incorporated in 2010 and is headquartered in Mumbai, India. The Company has acquired shareholding to the extent of 19.26% during the year 2010-11, 20% during the year 2020-21 & additional 13.09% during the year 2021-22 in Trophic Wellness Pvt. Ltd and status of Trophic Wellness Pvt. Ltd. is changed from associate to subsidiary w.e.f 11^th June 2021. Trophic Wellness Pvt. Ltd. is engaged in the manufacturing and marketing of nutraceuticals with its manufacturing unit situated in Sikkim. During the current year company has acquired additional 6.53% in Trophic Wellness Pvt. Ltd. resulting in total equity holding of 58.88%.

i) Krebs Biochemicals & Industries Ltd., India

Krebs Biochemicals and Industries Ltd. was established in 1991. During the financial year 2014-15, Krebs Biochemicals and Industries Ltd. became an associate company. Krebs undertakes both contract manufacturing and develops products for sale in global markets. Krebs is listed on NSE and BSE and is headquartered in Vishakhapatnam, India with manufacturing plants in Nellore and Vishakhapatnam. Expertise and infrastructure in the areas of chemical synthesis, fermentation and enzymatic technologies along with a focus on cost and quality makes Krebs a logical partner of the Company for the development and supply of products made using one or more of these technologies.

Equity Shares-During the year 2019-20 company has been allotted 13,70,000 equity shares resulting into increase in holding to the extent of 44.67%. Further, during the year 2021-22, the company has been allotted 19,40,000 shares upon conversion of share warrants. Now Company''s holding in Krebs is 49.65%.

Preference Shares- During the year 2019-20 Company has been allotted 30,00,000, 9% preference shares (non convertible, redeemable & non cumulative) of ''100/- each. Further, during the year 2021-22 company has been allotted 1,00,00,000, 9% preference shares (non convertible, redeemable & non cumulative) of '' 100/- each. Now company has 1,30,00,000, 9% preference shares (non convertible, redeemable & non cumulative) of '' 100/- each.

j) Lyka Labs Limited

Lyka Labs Limited was incorporated in 1976. In the year 2021-22 the company has acquired 26.58% shareholding & during the year Company has acquired additional shareholding to the extent of 4.78% of Lyka resulting into total holding percentage to 31.36%. Lyka Labs Limited is engaged in the business of manufacturing and marketing of injectables, lyophilized injectables and topical formulations. Lyka''s Manufacturing facility is situated at Ankleshwar, Gujarat. Lyka''s shares are listed at BSE & NSE. During the previous year the company had entered into a joint management control agreement with the promoters of the said company and in current year appointed independent director w.e.f 8^th August 2022, with this the status of Lyka Labs Limited has been changed from associates to Joint venture w.e.f 8^th August 2022.

Convertible Share Warrants (partly paid)- During the year company has also been allotted 50,00,000 convertible share warrants of '' 10 each partly paid. These warrants are convertible into equity shares in one or more tranches, at the option of the allottee, within a period of 18 months of its allotment.

k) Disclosure required under Schedule III on utilization of borrowed funds and share premium :

During the year, the Company has invested in Redeemable Preference Shares of Ipca Pharmaceuticals, Inc. USA (Ipca USA), a wholly owned subsidiary (WOS) aggregating to US$ 60,00,000 ('' 48.82 crores). Such investment was made to enable the additional funding to its step down WOSs viz. Bayshore Pharmaceuticals LLC, USA (Bayshore) and Pisgah Laboratories Inc., USA (Pisgah). Subsequent to above investments, Ipca USA extended loan of US$ 15,00,000 to Bayshore. Ipca USA also invested in Redeemable Preference Shares of Pisgah aggregating to US$ 35,00,000. Other than these transactions, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

l) The Company has not received any fund from any person(s) or entity(ies), including foreign entities ("Funding party") with the understanding (whether recorded in writing or otherwise) that the Company shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding party (ultimate beneficiaries); or provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

Note: Investment in ABCD Technologies LLP :

During the previous year the company has made a strategic investment of '' 25 crores in ABCD Technologies LLP. ABCD Technologies LLP will, through its investment entities, engage in the objective of digitizing health care infrastructure in India. The investment is accounted as Fair Value through other comprehensive income (FVTOCI) as per Company''s election in accordance with Ind AS 109- Financial Instruments. The Company has a 4.03% share of profit/loss and voting rights. In terms of the limited liability partnership agreement, the contribution made by the Company has a lock-in period of 3 years from the date of investment till April 30, 2024.

b) Disclosure u/s 186(4) of the Companies Act 2013 is made under Investment schedule vide Note reference - 4C

c) Investment by the loanee in the shares of the Company:

None of the loanees have, per se , made investments in the shares of the Company.

d) Loans or Advances in the nature of loans which are granted to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, that are repayable on demand or without specifying any terms or period of repayment are as under:

Note: No amount is due from any of the Directors or Officers of the Company, severally or jointly with any other person; or from firms where such director is a partner or from private companies where such director is a member.

The Company uses a provision matrix to determine impairment loss on portfolio of its trade receivable. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward- looking estimates. At every reporting date, the historically observed default rates are updated and changes in forward-looking estimates are analyzed. The Company estimates the following matrix at the reporting date which is calculated on overdue amounts.

iii) Rights and obligations of shareholders

The Company has only one class of share referred as equity shares having a par value of '' 1/- per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after payment of external liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders. The dividend if recommended by management is subject to shareholders'' approval at the Annual General Meeting.

v) Pursuant to the approval of the shareholders accorded in the Extraordinary General Meeting (EGM) of the Company held on December 16, 2021, each equity share of face value of '' 2/- (Two) per share was subdivided into two equity shares of face value of '' 1/- (One) per share, with effect from January 11,2022.

vi) Disclosure as required by Ind AS 103 Business Combination

A Merger of Ramdev Chemical Private Limited and Tonira Exports Limited with Ipca Laboratories Limited

Pursuant to the Scheme of Merger (''the Scheme'') of Ramdev Chemical Private Limited (Ramdev) and Tonira Exports Limited (Tonira) with Ipca Laboratories Limited (Ipca) under the provisions of Sections 230 to 232 of the Companies Act, 2013 which has been approved by the National Company Law Tribunal vide their order delivered on 27^th April 2023, which has been filed with the Registrar of Companies on May 23, 2023, to make the Scheme effective. All the assets and liabilities, both movable and immovable, all other interest, rights and power of every kind, and all its debts, liabilities, including contingent liabilities, duties and obligations have been transferred to and vested in the Transferee company with effect from the Appointed Date 1^st April 2022. Accordingly, the Scheme has been given effect to in these accounts. Since the Business Combination is of entities under common control in accordance with the Appendix C of Ind AS 103, the financial information in the financial statements in respect of prior periods should be restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination. Accordingly, the Company has accounted for the Scheme in its books of accounts with effect from 1^st April 2021 as required by Appendix C of Ind AS 103 "Business Combination". Figures for financial year 2021-22 are accordingly restated to give effects of the merger.

B Issue of Shares/Consideration: Since Ramdev Chemical Private Limited and Tonira Exports Limited are the wholly owned subsidiaries of the Company, there was no exchange/issue of shares by the Company to the shareholders of Ramdev Chemical Private Limited and Tonira Exports Limited.

C Salient Features of the Scheme of Merger by Absorption

(i) Description of Company and Background of Ramdev Chemical Private Limited

Ramdev Chemical Private Limited (CIN: U24200MH1999PTC120863) is a Private Limited Company incorporated under the Companies Act, 1956 having its registered office at Plot No.142-AB, Kandivali Industrial Estate, Kandivali (West), Mumbai City, MH 400067 IN.The Transferor Company is a pharmaceutical company manufacturing in all forms, heavy chemicals of all kinds, (Solid, liquid, gaseous), bulk drugs, medicinal and pharmaceuticals products. The products of the Company are sold in and outside India. The Company has a manufacturing unit in India at Tarapur (Maharashtra) for manufacturing of Active Pharmaceutical Ingredients (Bulk Drugs) (APIs).

(ii) Description of Company and Background of Tonira Export Limited

Tonira Export Limited (CIN: U51909MH1995PLC248308) is a Private Limited Company incorporated under the Companies Act, 1956 having its registered office at142AB, Kandivali Industrial Estate Kandivali (West), Mumbai City, MH 400067 IN. The Transferor Company currently is not engaged in any active business. The Company was the wholly owned subsidiary of Tonira Pharma Ltd. and became wholly owned subsidiary of Ipca laboratories Limited (Transferee Company)upon merger of the said Tonira Pharma Ltd. with Ipca Laboratories Ltd. (Transferee Company) in April, 2012.

(iii) Appointed date

The appointed date for the purpose of this amalgamation is 1^st April 2022.

(iv) Accounting Treatment

In accordance with the scheme approved, the accounting for this amalgamation has been done in accordance with the "Pooling of Interest Method" referred to in Appendix C - Business combinations of entities under common control of Indian Accounting Standard 103- "Business Combination" of the Companies (Indian Accounting Standards) Rules, 2015.

D Ipca has accounted for the Scheme in its books of accounts with effect from 1st April 2021 as explained in para (vi) A above and accordingly has restated prior period comparative.

(i) With effect from 01^st April 2021, all assets and liabilities appearing in the books of accounts of Ramdev and Tonira have been transferred to and vested in Ipca and have been recorded by Ipca at their respective carrying values.

(ii) The difference between the carrying values of net identifiable assets and liabilities of Ramdev Chemical Private Limited transferred to Ipca Laboratories Limited pursuant to this scheme and the value of investments in the books of Ipca Laboratories Limited has been disclosed as Amalgamation Adjustment Deficit Account as per the provisions of Appendix C of Ind AS 103.

In the case of Tonira Exports Limited, there was no difference between the carrying values of net identifiable assets and liabilities and the equity. However the existing reserves have retained their character on merger with Ipca.

(iii) All inter company transactions have been eliminated on incorporation of the accounts of Ramdev Chemical Private Limited and Tonira Exports Limited in Ipca Laboratories Limited.

Nature and purpose of each reserve

(a) Capital Reserve

During amalgamation / merger / acquisition, the excess of net assets taken, over the consideration paid, if any, is treated as capital reserve.

(b) Securities Premium

The amount received in excess of face value of the equity shares is recognized in Securities Premium Reserve. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium reserve. This reserve is utilized in accordance with the provisions of the Companies Act, 2013.

(c) Capital Redemption Reserve

The Company has recognized Capital Redemption Reserve on buy-back of equity shares from its retained earnings. The amount in Capital Redemption Reserve is equal to nominal amount of the equity shares bought back.

(d) General Reserve

The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to the statement of profit and loss.

(e) Retained Earnings

Retained earnings are the profits that the Company has earned till date and is net of amount transferred to other reserves such as general reserves, debenture redemption reserve etc., amount distributed as dividend and adjustments on account of transition to Ind AS.

(f) Amalgamation adjustment deficit

The difference between the carrying values of net identifiable assets and liabilities of the transferor Company transferred to the transferee Company pursuant to the Scheme and the value of consideration paid, has been disclosed as Amalgamation Adjustment Deficit Account as per the provisions of Appendix C of Ind AS 103, Business Combination of Entities under common control.

(g) Effective portion of cash flow hedges

The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on the changes of the fair value of the designated portion of the hedging instruments that are recognized and accumulated under the cash flow hedge reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basic adjustment to the non-financial hedged item.

(h) Other items of OCI

This reserve represents exchange differences arising on account of conversion of foreign operations to Company''s functional currency and fair value of investments.

b) Details of securities and repayment terms of secured loans stated above;

(i) Foreign Currency Term Loans (Secured)

1 JP Morgan Chase Bank, Singapore

This facility is secured by way of an exclusive charge on Solar and Wind projects of the company.

Repayable in 16 quarterly equal installments of USD 9,37,500 starting from May 23, 2023.

2 Citibank N.A., Jersey

Secured by first pari-passu charge over movable assets of the Company except assets at Unit - II at Sikkim plant and specific machines at Athal and Ratlam which are financed under buyer''s credit.

Repayable in 16 equal quarterly installments from June 15, 2019.

The entire loan from Citi bank is repaid in the current year.

f) Registration of charges or satisfaction with Registrar of Company

Registration of charges

As at March 31^st, 2023, the company has registered all charges duly with Registrar of the Companies in favor of the lenders except in respect of term loan from HDFC bank Ltd sanctioned and disbursed in March 2023. As per sanction letter, the security shall be created within 6 months from the date first disbursement.

Satisfaction of charges

As per the records of the Registrar of Companies, Maharashtra, available on their website, various charges are yet to be satisfied, however, as per records of the Company, such loans have been fully repaid and none of the lenders have communicated or demanded any outstanding amount from the Company. The summarized details are as under:

16.2 Disclosure in accordance with Ind AS - 19 "Employee Benefits", of the Companies (Indian Accounting Standards) Rules, 2015.

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 employee''s last drawn basic salary per month computed proportionately for 15 days salary multiplied by 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 does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk. Investment risk

For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

Market risk (discount risk)

Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.

Longevity Risk

The impact of longevity risk will depend on whether the benefits are paid before retirement age or after. Typically for the benefits paid on or before the retirement age , the longevity risk is not very material.

Actuarial risk

Salary Increase Assumption: Actual Salary increase that are higher than the assumed salary escalation , will result in increase to the obligation at a rate that is higher than expected.

The following table summarizes the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the Balance Sheet.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would clear in isolation of one another as some of the assumptions may be correlated.

Further more, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

The gratuity liability for employees who are transferred under the scheme of merger is unfunded. The closing liability for the transferred employees is '' 1.49 Crores. (Current- '' 0.09 Crores and Non -current- '' 1.40 Crores).

* The Government of India had issued the Taxation Laws (Amendment) Act, 2019, which provides domestic companies an option to pay corporate tax at reduced rates effective from April 1, 2019 subject to certain conditions. The Company, in the quarter ended June 30, 2022, has decided to opt for a lower tax regime under section 115BAA (New Scheme) with effect from this financial year. In view of the same, outstanding MAT credit balance, which would not be available for set-off in future under the lower tax regime, has not been considered and the liability is reassessed at the new tax regime rate. As a result of the adoption of the New Scheme, net charge to the profit and loss is '' 8.76 crores (MAT credit charged off '' 72.46 Crores and Rate change impact '' 63.70 Crores) which has been effected in the year ended March 31, 2023. Provision for Current tax and deferred tax has been considered accordingly.

a) * Working capital loan from banks are secured by first charge by way of hypothecation of all the stocks, book debts and all other movable current assets of the Company and second charge by way of mortgage of the specific immovable properties of the Company and hypothecation of plant & machinery of the Company.

b) Quarterly statements of stocks and other current assets filed by the Company with banks are in agreement with the books of

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34 Segment Reporting

Disclosure as required by Ind AS 108 "Operating Segment", of the Companies (Indian Accounting Standards) Rules, 2015.

Based on the "management approach" as defined in Ind AS 108, the Chief Operating Decision Maker (CODM) evaluates the Company''s performance in accordance with Ind AS "Operating Segment", the Company has only one reportable operating segment i.e. Pharmaceuticals. The additional disclosure is being made in the consolidated financial statements.

The management assessed that fair value of cash and short-term deposits, trade receivables, trade payables, book overdrafts and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

39 Fair Value Hierarchy

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.

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

40 Financial Risk Factors

The Company''s business activities are exposed to a variety of financial risks: market/business risk, credit risk, exchange risk, etc. The Company''s focus is to foresee the unpredictability of financial and business risks and seek to minimize potential adverse effects of these risks on its business and financial performance.

i. Business/Market Risk

The primary business/market risk to the Company is the price risk and its ability to pass on the same to its customers. The Company''s operations extend to a number of countries across the globe and its products pricing competitiveness is a primary factor for the acceptability of Company''s products in those markets. The Company has a robust procurement process, which ensures that its pricing power is not adversely affected by price changes in the market place for its raw materials. The backward integration into manufacturing of several API''s for its own use in the formulations manufacturing also works as a mitigating strategy for price risk faced by the Company.

The other business risk is regulatory risk and regulatory audits of its manufacturing facilities by the regulators to ensure that the manufacturing facilities meet the current Good Manufacturing Practices (cGMP) requirements. The Company is already exposed to certain audit observations from the US FDA for 3 of its manufacturing plants and has taken the necessary corrective measures to redress those US FDA audit observations so as to be able to market all its products once again in the US market. While the stringent regulatory requirements and audits works as a business risk, the successful audit of its facilities by regulators coupled with price competitiveness results in higher business and margins for the Company.

The Company''s products are also subjected to product liability claims/litigations. To mitigate these risks, the Company has obtained adequate Product Liability Insurance.

The Company, however, has a reduced risk from dependence on any single customer as no single customer or customer group accounts for more than 10% of Company''s annual revenue. The Company also continuously forays into different markets/countries to reduce its dependence on any particular country or customer group. The Company also has a diversified therapeutic product portfolio and therefore no single product account for more than 10% of Company''s annual revenue.

ii. Credit risk

The Company has exposure to credit risks associated with sales to various developing markets/countries. To mitigate these credit risks arising out of this, the Company obtains credit insurance on a regular basis after evaluating the credit risk associated with a country/customer. Country/customer where no credit insurance is available, the Company monitors such risk by continuously monitoring its exposure to such country/customer. There was no historically significant credit risk in the domestic market for the Company. Based on the historical data, the Company has made adequate provisions for expected loss because of credit risk, which is neither significant nor material.

iii. Interest risk

The Company has borrowings mainly in foreign currencies which is linked to SOFR. The Company mitigates these risks associated with floating SOFR rates by entering into interest rate swaps to move them to fixed SOFR rates. The domestic interest risk is exposed to the changes in the RBI bank rate. The Company manages this risk by managing its working capital effectively.

iv. Foreign currency risk

The Company continuously manages its risks associated with foreign currency by adopting various hedging strategies in consultation with internal and external experts. The Company has a system of regularly monitoring its currency wise exposures. The significant part of Company''s receivables and borrowings are in US Dollars which operates as a natural hedge against each other. The Company has a policy not to borrow in a currency where it has no business exposure.

The Company has entered into various derivatives transactions, which are not intended for trading or speculative purpose but to hedge the export receivables included in ((II) a) above and future receivables and foreign currency loan interest rate risks.

vi. Other Price Risk

The Company is mainly exposed to the price risk due to its investment in mutual funds. However, the Company is investing only in debt funds. The price risk arises due to uncertainties about the future market values of these investments. At March 31,2023, the investments in mutual funds is '' 323.32 crores (Previous year '' 719.31 crores).These are exposed to price risk. In order to minimize price risk arising from investments in mutual funds, the Company predominately invest in liquid fund where price risk is minimum.

41 Capital Management

For the purpose of the Company''s capital management, capital includes paid-up equity share capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximize the shareholders'' value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust its dividend payment ratio to shareholders, return capital to shareholders or issue fresh shares. The Company monitors capital using a gearing ratio, which is net debt divided by its total capital. The Company includes within its net debt the interest bearing loans and borrowings, trade and other payables less cash and cash equivalents.

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets the financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the lending institutions to immediately call back the loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing the capital during the years ended March 31, 2023 and March 31, 2022.

Till previous year ended March 31,2022, the Company had designated certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions. The related transactions for the balance in the cash flow hedging reserve are expected to occur and reclassified to revenue in the Statement of Profit and Loss. During the current year, there are no transactions to be routed through the hedge reserve account and hence all the exchange gain / loss are taken to statement of profit & loss account.

Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and the hedging instrument, including whether the hedging instrument is expected to offset changes in cash flows of hedged items.

If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be re-balanced by adjusting either the volume of the hedging instrument or the volume of the hedged item so that the hedged ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and accounted in the Statement of Profit and Loss at the time of hedge relationship re-balancing.

The Company offsets a financial asset and a financial liability when it currently has a legally enforceable right to set off the recognized amounts and the Company intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. During the year the Company has not settled any such transactions.

44 Figures for the previous year have been regrouped / reinstated, wherever considered necessary.

45 The balance sheet, statement of profit and loss, cash flow statement, statement of changes in equity, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended March 31,2023.

Mar 31, 2022

vi) Details of investments in subsidiary / joint venture / associate at cost

a) Ipca Pharmaceuticals, Inc. USA

This wholly owned subsidiary company was incorporated under the laws of the State of New Jersey in the United States on July 10, 2003. This subsidiary company is coordinating the development and registration of formulations developed by the Company in United States of America as well as distribution of Active Pharmaceutical Ingredients (APls) manufactured by the Company in the US market. During the year 2017-18, this subsidiary acquired 90% Share capital of Pisgah Laboratories Inc. USA. Further, during the year 2018-19, this subsidiary has acquired 80% units of Bayshore Pharmaceuticals LLC, a New Jersey limited liability company (Bayshore). During the year, this subsidiary has acquired the remaining 20% share capital of Bayshore and with this acquisition, Bayshore is now wholly owned by Ipca Pharmaceuticals Inc., USA.

b) Ipca Laboratories (U.K.) Ltd.,U.K.

c) Ipca Pharma Nigeria Ltd. Nigeria

During the year 2006-07, the Company acquired the entire share capital of Ipca Pharma Nigeria Ltd. Thus, Ipca Pharma Nigeria Ltd. became wholly owned subsidiary of the Company with effect from January 31, 2007. The Company was incorporated as a private company in Nigeria. It commenced commercial operations in December 2001. It is engaged in importation and marketing of formulations and APIs in the Nigerian market.

d) Ipca Pharma (Australia) Pty Ltd. Australia

e) Ipca Pharma (NZ) Pty Ltd., New Zealand

f) Ipca Pharmaceuticals Ltd. SA de CV. Mexico

g) Tonira Exports Limited, India

Tonira Exports Ltd. was incorporated as a wholly owned subsidiary of Tonira Pharma Ltd. The Company acquired management control of Tonira Pharma Ltd. in May 2008. Upon merger of Tonira Pharma Ltd. with the Company in the year 2011-12, Tonira Exports Ltd. has become wholly owned subsidiary of the Company. This Company is presently not into any business.

h) Avik Pharmaceutical Ltd., India

During the year 2013-14 the Company had acquired 49.02% of shares in Avik Pharmaceutical Ltd. Avik is manufacturing APIs, primarily Cortico Steroids and Hormones since 1980. Avik is pioneer in the manufacturing of steroids in India. Avik''s two manufacturing facilities are located at Vapi, Gujarat. During the year 2018-19, the Company has been allotted 33,000 shares under right issue. Further, during the current year 2021-22, the Company has acquired additional 11,000 shares. Now Company''s holding in Avik Pharma is 50.00%.

i) Trophic Wellness Pvt. Ltd., India

Trophic Wellness Pvt. Ltd. was incorporated in 2010 and is headquartered in Mumbai, India. The Company has acquired shareholding to the extent of 19.26% during the year 2010-11 & additional 20% during the year 2020-21 in Trophic Wellness Pvt. Ltd. Trophic Wellness Pvt. Ltd. is engaged in the manufacturing and marketing of nutraceuticals with its manufacturing unit situated in Sikkim. During the year Company has acquired additional shareholding to the extent of 13.09%. Now Company''s holding in Trophic is 52.35%. Also, w.e.f 11th June 2021, the status of Trophic Wellness Private Limited is changed from Associate to Subsidiary.

j) Krebs Biochemicals & Industries Ltd., India

Krebs Biochemicals and Industries Ltd. was established in 1991. During the financial year 2014-15, Krebs Biochemicals and Industries Ltd. became an associate company. Krebs undertakes both contract manufacturing and develops products for sale in global markets. Krebs is listed on NSE and BSE and is headquartered in Vishakhapatnam, India with manufacturing plants in Nellore and Vizag. Expertise and infrastructure in the areas of chemical synthesis, fermentation and enzymatic technologies along with a focus on cost and quality makes Krebs a logical partner of the Company for the development and supply of products made using one or more of these technologies.

Equity Shares - During the year 2019-20 company has been allotted 13,70,000 equity shares resulting into increase in holding to the extent of 44.67%. Further, during the current year 2021-22, the company has been allotted 19,40,000 shares upon conversion of share warrants. Now Company''s holding in Krebs is 49.65%.

Preference Shares - During the year 2019-20 Company has been allotted 30,00,000, 9% preference shares (non convertible, redeemable & non cumulative) of ''100/- each. Further, during the current Year 2021-22 company has been allotted 1,00,00,000, 9% preference shares (non convertible, redeemable & non cumulative) of '' 100/- each. Now company has 1,30,00,000, 9% preference shares (non convertible, redeemable & non cumulative) of '' 100/- each.

k) Ramdev Chemical Pvt. Ltd., India

Ramdev Chemical Pvt. Ltd. was established in 1999. During the year 2019-20, the Company has acquired 100% shareholding in Ramdev Chemical Pvt. Ltd. Ramdev Chemical Pvt. Ltd. is engaged in the manufacturing and marketing of drug intermediates and Active Pharmaceutical Ingredients (API''s) with its manufacturing unit situated in Tarapur, Boisar, Dist. Palghar (Maharashtra).

l) Lyka Labs Limited, India

Lyka Labs Limited was incorporated in 1976. During the year, the company has acquired 26.58% shareholding of Lyka. Lyka Labs Limited is engaged in the business of manufacturing and marketing of injectables, lyophilized injectables and topical formulations. Lyka''s Manufacturing facility is situated at Ankleshwar, Gujarat. Lyka''s shares are listed at BSE & NSE. The company has entered into a joint management control agreement with the promoters of the said company and the company is in process of appointing its nominee as a director of Lyka Labs Limited.

m) Disclosure as per Rule 11 of the Companies (Audit and Auditors) Rules, 2014:

During the year, the Company has invested in Redeemable Preference Shares of Ipca Pharmaceuticals, Inc. USA (Ipca USA), a wholly owned subsidiary (WOS) aggregating to US$ 49,00,000 ('' 36.21 crores). Such investment was made to enable the additional funding to its step down WOSs viz. Bayshore Pharmaceuticals LLC, USA (Bayshore) and Pisgah Laboratories Inc., USA (Pisgah). Subsequent to above investments, Ipca USA has increased its stake in Equity shares of Bayshore by US$ 12,00,000 and has also extended loan of US$ 20,00,000 to said WOS. Ipca USA also invested in Redeemable Preference Shares of Pisgah aggregating to US$ 17,00,000. Other than these transactions, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

n) The Company has not received any fund from any person(s) or entity(ies), including foreign entities ("Funding party") with the understanding (whether recorded in writing or otherwise) that the Company shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding party (ultimate beneficiaries); or provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

iii) Rights and obligations of shareholders

The Company has only one class of share referred as equity shares having a par value of '' 1/- (previous year ''2/-) per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after payment of external liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders. The dividend is recommended by management which is subject to shareholders'' approval at the Annual General Meeting.

Nature and purpose of each reserve Capital Reserve

During amalgamation / merger / acquisition, the excess of net assets taken, over the consideration paid, if any, is treated as capital reserve.

Securities Premium

The amount received in excess of face value of the equity shares is recognised in Securities Premium Reserve. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium reserve. This reserve is utilised in accordance with the provisions of the Companies Act, 2013.

Capital Redemption Reserve

The Company has recognised Capital Redemption Reserve on buy-back of equity shares from its retained earnings. The amount in Capital Redemption Reserve is equal to nominal amount of the equity shares bought back.

General Reserve

Retained Earnings

Effective portion of cash flow hedges

The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on the changes of the fair value of the designated portion of the hedging instruments that are recognised and accumulated under the cash flow hedge reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basic adjustment to the nonfinancial hedged item.

Other items of OCI

This reserve represents exchange differences arising on account of conversion of foreign operations to Company''s functional currency and fair value of investments.

c) Details of securities and repayment terms of secured loans stated above

(i) Foreign Currency Term Loans (Secured)

1 JP Morgan Chase Bank, Singapore

This facility is to be secured by way of an exclusive charge on Solar and Wind projects of the company. The bank is in the process of executing relevant documents.

Repayable in 16 quarterly installments starting from May 23, 2023.

2 Citibank N.A., Jersey

Secured by first pari-passu charge over movable assets of the Company except assets at Unit - II at Sikkim plant and specific machines at Athal and Ratlam which are financed under buyer''s credit.

Repayable in 16 equal quarterly installments from June 15, 2019.

3 HSBC Bank Mauritius Ltd.

Secured by first pari-passu charge over current and future movable fixed assets of the Company except assets at Baroda. Repayable in 11 half yearly un-equal installments from December 08, 2016.

(ii) Rupee Term Loan (Secured)

1 HDFC Bank Ltd.

Secured by first pari-passu charge over current and future movable fixed assets of the Company except solar and wind projects. Repayable in 20 quarterly un-equal installments from June 14, 2022.

Unsecured Long Term Borrowing 1 ECB-HSBC Bank Mauritius Ltd. (Unsecured)

Availed for refinancing of ECB of Standard Chartered Bank - London.

Repayable in 16 quarterly equal installments from August 16, 2019.

d) Maturity profile of borrowings is as per the original sanction terms without Ind AS effects.

14.1 Disclosure in accordance with Ind AS - 19 "Employee Benefits", of the Companies (Indian Accounting Standards) Rules, 2015.

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 employee''s last drawn basic salary per month computed proportionately for 15 days salary multiplied by the number of years of service. The gratuity plan is a funded plan and the company makes contributions to recognised funds in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk

Market risk (discount risk)

Longevity Risk

Actuarial risk

Salary Increase Assumption: Actual Salary increase that are higher than the assumed salary escalation , will result in increase to the obligation at a rate that is higher than expected.

The following table summarizes the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the Balance Sheet.

32 Segment Reporting

Disclosure as required by Ind AS 108 "Operating Segment", of the Companies (Indian Accounting Standards) Rules, 2015.

Notes:* It includes '' 4.38 crores (Previous year '' 4.38 crores) towards interest and penalty demanded by excise department, Ankleshwar relating to erstwhile Tonira Pharma Limited since amalgamated with the Company and is not payable in accordance with the order passed by the Hon''ble Central Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad. The Department had moved the Hon''ble Gujarat High Court against the said CESTAT order and as per the order of the said Hon''ble High Court, the Company has furnished a Bank Guarantee of '' 2.00 crores to the Department.

** Company has provided security by way of lien over the term deposit of '' 11.00 crores (previous year '' 11.00 crores) placed by the company with RBL Bank (previous year with Bajaj Finance Limited) towards short term credit facility availed by Krebs Biochemicals & Industries Ltd., an Associate company.

37 Fair Value Hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised 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.

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

38 Financial Risk Factors

i. Business/Market Risk

exposed to certain audit observations from the US FDA for 3 of its manufacturing plants and has taken the necessary corrective measures to redress those US FDA audit observations so as to be able to market all its products once again in the US market. While the stringent regulatory requirements and audits works as a business risk, the successful audit of its facilities by regulators coupled with price competitiveness results in higher business and margins for the Company.

The Company''s products are also subjected to product liability claims/litigations. To mitigate these risks, the Company has obtained adequate Product Liability Insurance.

ii. Credit risk

iii. Interest risk

iv. Foreign currency risk

vi. Other Price Risk

The Company is mainly exposed to the price risk due to its investment in mutual funds. However, the Company is investing only in debt funds. The price risk arises due to uncertainties about the future market values of these investments. At March 31,2022, the investments in mutual funds is '' 719.31 crores (Previous year '' 393.83 crores).These are exposed to price risk. In order to minimize price risk arising from investments in mutual funds, the Company predominately invest in liquid fund where price risk is minimum. Price risk sensitivity

0.10% increase or decrease in prices will have the following impact on profit/loss before tax and on other components of investment value.

39 Capital Management

During the year ended March 31, 2022 the Company has designated certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions. The related transactions for the balance in the cash flow hedging reserve are expected to occur and reclassified to revenue in the Statement of Profit and Loss . However, as at March 31, 2022 , there are no transactions in the hedge reserve that are required to be reclassified to the revenue in the statement of profit & loss account.

43 Figures for the previous year have been regrouped / reclassified / reinstated, wherever considered necessary.

44 The balance sheet, statement of profit and loss, cash flow statement, statement of changes in equity, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended March 31,2022.

Mar 31, 2021

v) Details of investments in subsidiary / joint venture / associate at cost

a) Ipca Pharmaceuticals, Inc. USA

b) Ipca Laboratories (U.K.) Ltd.,U.K.

During the financial year 2003-04, the Company incorporated this wholly owned subsidiary to apply and obtain product registrations in the United Kingdom. During the year 2011-12, this subsidiary acquired 100% share capital of Onyx Research Chemicals Ltd., holding company of Onyx Scientific Ltd. During the year 2015-16, Onyx Research Chemicals Ltd. , UK merged with its holding company Ipca Laboratories (UK) Ltd. and consequent to this, Onyx Scientific Ltd. has became wholly owned subsidiary of this Company. During the year 2018-19, Onyx Scientific Ltd. has acquired 10% share capital of Pisgah Laboratories Inc. USA.

c) Ipca Pharma Nigeria Ltd. Nigeria

During the year 2006-07, the Company acquired the entire share capital of Ipca Pharma Nigeria Ltd. Thus, Ipca Pharma Nigeria Ltd. became wholly owned subsidiary of the Company with effect from January 31, 2007. The Company was incorporated as a private company in Nigeria. It commenced commercial operations in December 2001. It is engaged in importation and marketing of formulations and APIs in the Nigerian market.

d) Ipca Pharma (Australia) Pty Ltd. Australia

e) Ipca Pharma (NZ) Pty Ltd., New Zealand

f) Ipca Pharmaceuticals Ltd. SA de CV. Mexico

g) Tonira Exports Limited, India

h) Avik Pharmaceutical Ltd., India

i) Trophic Wellness Pvt. Ltd., India

Trophic Wellness Pvt. Ltd. was incorporated in 2010 and is headquartered in Mumbai, India. The Company has acquired shareholding to the extent of 19.26% in Trophic Wellness Pvt. Ltd. during the year 2010-11. Trophic Wellness Pvt. Ltd. is engaged in the manufacturing and marketing of nutraceuticals with its manufacturing unit situated in Sikkim. During the year company has acquired additional shareholding to the extent of 20%. Now Company''s holding in Trophic is 39.26%

j) Krebs Biochemicals & Industries Ltd., India

Krebs Biochemicals and Industries Ltd. was established in 1991. During the financial year 2014-15, Krebs Biochemicals and Industries Ltd. became an associate company. Krebs undertakes both contract manufacturing for large pharmaceutical and multinational companies and develops products for sale in global markets. Krebs is listed on NSE and BSE and is headquartered in Vishakhapatnam, India with manufacturing plants in Nellore and Vizag. Expertise and infrastructure in the areas of chemical synthesis, fermentation and enzymatic technologies along with a focus on cost and quality makes Krebs a logical partner of the Company for the development and supply of products made using one or more of these technologies. During the year 2019-20 company has been allotted 13,70,000 equity shares resulting into increase in holding to the extent of 39.69%.During the year 2019-20 Company has also been alloted 30,00,000, 9% preference shares (non convertible, redeemable & non cumulative) of '' 100/- each and 35,60,000 of '' 10/- each convertible share warrants(partly paid). During the year company has been alloted 8,10,000 shares upon conversion of share warrants. Now Company''s holding in krebs is 44.67%

k) Ramdev Chemical Pvt. Ltd., India

Ramdev Chemical Pvt. Ltd. was established in 1999. During the year 2019-20, The Company has acquired 100% shareholding in Ramdev Chemical Pvt. Ltd. Ramdev Chemical Pvt. Ltd. is engaged in the manufacturing and marketing of drug intermediates and Active Pharmaceutical Ingredients (API''s) with its manufacturing unit situated in Tarapur, Boisar, Dist. Palghar (Maharashtra).

iii) Rights and obligations of shareholders

The Company has only one class of share referred as equity shares having a par value of '' 2/- per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after payment of external liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders. The dividend is recommended by management which is subject to shareholders'' approval at the Annual General Meeting.

Share Warrant

The Company obtained in-principle approval under the SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015 from National Stock Exchange of India (NSE) and BSE Limited to issue and allot 5,00,000 (Five Lacs Only) convertible warrants at a price of '' 955/- per warrant. Pursuant to the shareholder approval dated October 24, 2019, the Company issued and allotted

5,00,000 (Five Lacs Only) convertible warrants at a price of '' 955/- per warrant with a right to the warrant holders to apply for and be allotted 1 (One) Equity Share of the face value of '' 2/- each of the Company ("Equity Shares") at a premium of '' 953/- per share for each Warrant within a period of 18 (Eighteen) months from the date of allotment of the Warrants.

Pursuant to applications received from the allottees to convert the warrants allotted to them into equity shares, the Board of Directors of the Company at their meeting held on 2nd September, 2020 have allotted 5,00,000 Equity shares of '' 2/- each fully paid for cash at a price of '' 955/- per equity share including a premium of '' 953/- per share aggregating to '' 47,75,00,000/-

Nature and purpose of each reserve Capital Reserve

During amalgamation / merger / acquisition, the excess of net assets taken, over the consideration paid, if any, is treated as capital reserve.

Securities Premium

Capital Redemption Reserve

General Reserve

Retained Earnings

Effective portion of cash flow hedges

The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on the changes of the fair value of the designated portion of the hedging instruments that are recognised and accumulated under the cash flow hedge reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basic adjustment to the non-financial hedged item.

Other items of OCI

This reserve represents exchange differences arising on account of conversion of foreign operations to Company''s functional currency.

c) Details of securities and repayment terms of secured loans stated above

(i) Foreign Currency Term Loans (Secured)

1 BNP PARIBAS, Singapore Branch

Secured by first pari-passu charge by way of hypothecation of movable fixed assets both present and future including Pithampur Plant(Indore).

Repayable in 13 equal quarterly installments from 30^th June, 2017.

2 Citibank N.A., Jersey

Secured by first pari-passu charge over movable assets of the company except assets at Unit - II at Sikkim plant and specific machines at Athal and Ratlam which are financed under buyer''s credit. Repayable in 16 equal quarterly installments from June 15, 2019.

3 HSBC Bank Mauritius Ltd.

Secured by first pari-passu charge over current and future movable fixed assets of the Company except assets at Baroda. Repayable in 11 half yearly un-equal installments from December 08, 2016.

(ii) ECB-HSBC Bank Mauritius Ltd. (Unsecured)

Availed for refinancing of ECB of Standard Chartered Bank - London.

Repayable in 16 quarterly equal installments from August 16, 2019.

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 employee''s last drawn basic salary per month computed proportionately for 15 days salary multiplied by the number of years of service. The gratuity plan is a funded plan and the company makes contributions to recognised funds in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk-

Market risk (discount risk)

Longevity Risk

Actuarial risk

Salary Increase Assumption: Actual Salary increase that are higher than the assumed salary escalation , will result in increase to the obligation at a rate that is higher than expected.

The following table summarizes the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the Balance Sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

32 Segment Reporting

Disclosure as required by Ind AS 108 "Operating Segment", of the Companies (Indian Accounting Standards) Rules, 2015.

37. Fair Value Hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised 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 group has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - I nputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

38 Financial Risk Factors

i. Business/Market Risk

The Company''s products are also subjected to product liability claims/litigations. To mitigate these risks, the Company has obtained adequate Product Liability Insurance.

ii. Credit risk

iii. Interest risk

The Company has borrowings mainly in foreign currencies which is linked to Libor. The Company mitigates these risks associated with floating Libor rates by entering into interest rate swaps to move them to fixed Libor rates. The domestic interest risk is exposed to the changes in the RBI bank rate. The Company manages this risk by managing its working capital effectively.

iv. Foreign currency risk

vi. The Company has entered into Interest Rate Swap (IRS) Contracts against the underlying of USD ECB loans. In 2020-21, the Company has not unwound any of the IRS and hence actual net gain/loss is '' NIL. (previous year '' 0.41 crores) and gain/loss on net settlement is credited to interest expenses under finance cost.(Refer note no.26).

vii. Other Price Risk

The Company is mainly exposed to the price risk due to its investment in mutual funds. However, the Company is investing only in debt funds. The price risk arises due to uncertainties about the future market values of these investments. At March 31,2021, the investments in mutual funds is '' 393.83 crores (Previous year '' 238.25 crores).These are exposed to price risk. In order to minimize price risk arising from investments in mutual funds, the Company predominately invest in liquid fund where price risk is minimum. Price risk sensitivity

0.10% increase or decrease in prices will have the following impact on profit/loss before tax and on other components of investment value.

39 Estimation uncertainty relating to COVID-19 outbreak

Being manufacturers of pharmaceuticals, the operations of the Company were exempted from lockdown declared by both the Central and State Governments in the wake of Covid - 19 pandemic. The Company continued with the manufacturing operations at all its manufacturing sites albeit with challenges such as shortage of manpower, availability of materials and disruptions in the logistics and supply chain. The Company has considered the possible effects that may result due to the lockdown announced consequent to outbreak of Covid -19 on the carrying amounts of property, plant and equipment, investments, inventories, receivables and other current assets. Based on internal and external sources of information and economic forecasts, the Company expects the carrying amount of these assets will be recovered and will continue to have sufficient liquidity to fund its business operations as well as expansion plans. However, a definitive assessment of the impact, at this stage, is not possible in view of the highly uncertain economic environment and the situation is still evolving.

40 Capital Management

During the year ended March 31, 2021 the Company has designated certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions. The related transactions for the balance in the cash flow hedging reserve are expected to occur and reclassified to revenue in the Statement of Profit and Loss . However, as at March 31, 2021 , there are no transactions in the hedge reserve that are required to be reclassified to the revenue in the statement of profit & loss account.

42 Figures for the previous year have been regrouped / reclassified / reinstated, wherever considered necessary.

43 The balance sheet, statement of profit and loss, cash flow statement, statement of changes in equity, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended March 31,2021.

Mar 31, 2019

c) Details of securities and repayment terms of secured loans stated above

(i) Foreign Currency Term Loans

1 BNP PARIBAS, Singapore Branch

Secured by first pari passu charge by way of hypothecation of movable fixed assets both present and future Including Pithampur Plant(Indore).

Repayable in 13 equal quarterly instalments from 30th June, 2017.

2 DBS BANK, Singapore Branch

Secured by first pari passu charge by way of hypothecation of all the movable fixed assets both present and future. Repayable in 17 equal quarterly instalments from September 16, 2014.

3 Citibank N.A., Jersey

Secured by first pari passu charge over movable assets of the company except assets at Unit II at Sikkim plant and specific machines at Athal and Ratlam which are financed under buyers credit.

Repayable in 16 equal quarterly instalments from June 15, 2019.

4 HSBC Bank Mauritius Ltd.

a. Secured by first pari-passu charge over current and future movable fixed assets of the Company except assets at Pithampur, Indore and at Baroda.

Repayable in 9 equal quarterly instalments from September 26, 2016.

b. Secured by first pari-passu charge over current and future movable fixed assets of the Company except assets at Pithampur, Indore and at Baroda.

Repayable in 16 equal quarterly instalments from September 30, 2015.

c. Secured by first pari-passu charge over current and future movable fixed assets of the Company except assets at Baroda.

Repayable in 11 half yearly un-equal instalments from December 08, 2016.

5 Standard Chartered Bank- London

Secured by first pari-passu charge on movable fixed assets at Company''s API plant at Baroda and Formulation plant at SEZ Pithampur and the specific and exclusive charge on the unit II at Sikkim.

Repayable in 16 quarterly equal instalments from February 15, 2018.

6 United Overseas Bank Ltd.

Secured by first pari passu charge by way of hypothecation of movable fixed assets both present and future Including Pithampur plant (Indore).

Repayable in 4 equal half yearly instalments from June 29, 2018.

(ii) Buyer''s credit - Standard Chartered Bank

Exclusive Charge by way of hypothecation of specific movable fixed assets financed through this Buyers'' Credit.

Repayable 10% at end of 12 months, 45% at end of 24 months and balance 45% at end of 36 months from the date of drawdown.

14.1(i) Disclosure in accordance with Ind AS - 19 "Employee Benefits'', of the Companies (Indian Accounting Standards) Rules, 2015.

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 employee''s 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 does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk

Market risk (discount risk)

Longevity risk

The impact of longevity risk will depend on whether the benefits are paid before retirement age or after . Typically for the benefits paid on or before the retirement age , the longevity risk is not very material.

Actuarial risk

Salary Increase Assumption: Actual Salary increase that are higher than the assumed salary escalation , will result in increase to the obligation at a rate that is higher than expected.

The following table summarizes the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet :

The rate used to discount post-employment benefit obligations is determined by reference to market yields at the end of the reporting period on government bonds.

Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase and mortality.

The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of reporting period, while holding all other assumptions constant.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

(ii) Employee stock option plans

The Company has a stock option plan that provides for the granting of stock options to qualifying permanent employees including Whole time Non- Promoter Director of the Company. The option plan is summarized below:

The Board of Directors at the meeting held on 25th April, 2017 had granted 1,65,000 (One Lakh Sixty Five Thousand) option under Ipca Laboratories Limited -Employees Stock Option Scheme- 2014 (ESOS). The Option granted got vested on completion of 1 year from the date of grant of the option.

The compensation cost for ESOS 2014 has been recognized based on the fair value at the date of grant in accordance with the Black-Scholes method determined by an independent merchant banker. The Black -Scholes option-pricing model was developed for estimating fair value of trade options that have no vesting restrictions and are fully transferable. Since options pricing models require use of subjective assumptions, changes therein can materially affect fair value of the options. The options pricing models do not necessarily provide a reliable measurement of fair value of options.

* Secured loans are secured by first charge by way of hypothecation of all the stocks, book debts and all other movable current assets of the Company and second charge by way of mortgage of the immovable properties of the Company and hypothecation of plant & machinery of the Company.

31. Disclosure in accordance with Ind AS 17 "Leases'', of the Companies (Indian Accounting Standards) Rules, 2015.

The Company has taken various residential / god owns / offices premises (including furniture and fittings if any) under leave and license agreements. These generally range between 11 months to 3 years under leave and license basis. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in the statement of profit and loss under rent.

The Company has given certain plant and equipment under operating lease and the same is shown separately in property, plant

& equipment.

32. Segment Reporting

Disclosure as required by Ind AS 108 "Operating Segment'', of the Companies (Indian Accounting Standards) Rules, 2015.

*Note:- It includes Rs,4.38 crores (Previous year Rs,4.38 crores) towards interest and penalty demanded by excise department, Ankleshwar relating to erstwhile Tonira Pharma Limited since amalgamated with the Company and is not payable in accordance with the order passed by the Hon''ble Central Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad. The Department had moved the Hon''ble Gujarat High Court against the said CESTAT order and as per the order of the said Hon''ble High Court, the Company has furnished a Bank Guarantee of Rs,2.00 crores (Previous year Rs,2.00 crores) to the department.

ii. The Hon''ble Supreme Court of India by their order dated February 28, 2019, has clarified the principles based on which allowances paid to the employees should be identified for inclusion in basic wages for the purposes of computation of Provident Fund contribution. Pending directions or clarification from the EPFO, the quantification of impact, if any, is not ascertainable and consequently no effect has been given in the accounts.

37. Goods and Services Tax

In accordance with Ind AS 18 on "Revenue" and Schedule III to the Companies Act, 2013, for the quarter April 1, 2017 to June 30, 2017 were reported gross of Excise Duty and net of Value Added Tax (VAT) / Sales Tax. Excise duty was reported as a separate expense line item. Consequent to the introduction of Goods and Services Tax (GST) with effect from July 1, 2017, VAT / Central sales tax, excise duty etc. have been subsumed into GST and accordingly, the same is not recognized as part of revenue in terms of Ind AS 115. This has resulted in lower reported sales w.e.f. July 1,2017 in comparison to the sales reported under the pre-GST structure of indirect taxes. With the change in structure of indirect taxes, expenses are also being reported net of taxes.

39. Fair Value Hierarchy

This section explains the judgments 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 group has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

40. Financial Risk Factors

i. Business/ Market Risk

The primary business/market risk to the Company is the price risk and its ability to pass on the same to its customers. The Company''s operations extend to a number of countries across the globe and its products pricing competitiveness is a primary factor for the acceptability of Company''s products in those markets. The Company has a robust procurement process, which ensures that its pricing power is not adversely affected by price changes in the market place for its raw materials. The backward integration into manufacturing of several APIs for its own use in the formulations manufacturing also works as a mitigating strategy for price risk faced by the Company.

The Company''s products are also subjected to product liability claims/litigations. To mitigate these risks, the Company has obtained adequate Product Liability Insurance.

ii. Credit risk

iii. Interest risk

iv. Foreign currency risk

The Company has entered into various derivatives transactions, which are not intended for trading or speculative purpose but to hedge the export receivables including future receivables and foreign currency loan interest rate risks.

vi. The Company has entered into Interest Rate Swap (IRS) Contracts against the underlying of USD ECB loans. The actual net gain of Rs,3.88 crores upon unwinding of one of the IRS on ECB loan and gain on net settlement is credited to interest expenses under finance cost. (Refer note no.26).

vii. Other Price Risk

The Company is mainly exposed to the price risk due to its investment in mutual funds. However, the Company is investing only in debt funds. The price risk arises due to uncertainties about the future market values of these investments. At March 31 2019, the investments in mutual funds is '' 90.38 crores (Previous year : Rs,69.34 crores).These are exposed to price risk. In order to minimize price risk arising from investments in mutual funds, the Company predominately invest in liquid funds where price risk is minimum.

Price risk sensitivity:

0.10% increase or decrease in prices will have the following impact on profit/loss before tax and on other components of investment value :

1. Capital Management

No changes were made in the objectives, policies or processes for managing the capital during the years ended March 31, 2019 and March 31, 2018.

During the year ended March 31, 2019 the Company has designated certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions. The related transactions for the balance in the cash flow hedging reserve are expected to occur and reclassified to revenue in the statement of profit and loss. However as at March 31,2019 there are no transactions in the hedge reserve that are required to be reclassified to the revenue in the statement of profit and loss.

If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced by adjusting either the volume of the hedging instrument or the volume of the hedged item so that the hedged ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and accounted in the statement of profit and loss at the time of hedge relationship re-balancing.

The Company offsets a financial asset and a financial liability when it currently has a legally enforceable right to set off the recognized amounts and the Company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. During the year the Company has not settled any such transactions.

2. Figures for the previous year have been regrouped / reclassified / reinstated, wherever considered necessary.

3. The balance sheet, statement of profit and loss, cash flow statement, statement of changes in equity, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended March 31, 2019.

Mar 31, 2018

(A) Corporate Information

Incorporated in the year 1949, Ipca Laboratories Limited is a integrated pharmaceutical company manufacturing and marketing over 350 formulations and 80 APIâs covering various therapeutic segments. The products of the Company are now sold in over 120 countries across the globe. The Company has 17 manufacturing units in India manufacturing APIâs and formulations for the world market.

Authorization of Standalone Financial Statements

The Standalone financial statements were authorised for issue in accordance with a resolution of the Directors on May 29, 2018.

(B) Significant Accounting Policies

I) Basis of Preparation

The standalone financial statements comply in all material aspects with Indian Accounting Standards (âInd ASâ) prescribed under Section 133 of the Companies Act, 2013 (âthe Actâ), Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) (Amendment) Rules, 2016 and other relevant provisions of the Act.

The financial statements have been prepared on a historical cost basis, except for the following:

a) certain financial assets and liabilities (including derivative instruments) are measured at fair value; and

b) defined benefit plans - plan assets measured at fair value

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

II) Use of Judgments, Estimates And Assumption

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates, judgements and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of circumstances surrounding the estimates. Changes in estimates are reflected in the financial statement in the period in which changes are made and if material, their effects are disclosed in the notes to the financial statements.

The financial statements require management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosures of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods .

a. Judgments

In the process of applying the companyâs accounting policies, management has made judgments, which have significant effect on the amounts recognised in the separate financial statements.

b. Taxes

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

c. Defined benefit plans (gratuity benefits)

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. For plans operated outside India, the management considers the interest rates of high quality corporate bonds in currencies consistent with the currencies of the post-employment benefit obligation with at least an âAAâ rating or above, as set by an internationally acknowledged rating agency, and extrapolated as needed along the yield curve to correspond with the expected term of the defined benefit obligation. The underlying bonds are further reviewed for quality. Those having excessive credit spreads are excluded from the analysis of bonds on which the discount rate is based, on the basis that they do not represent high quality corporate bonds.

The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the respective countries.

1A : Goodwill

The Goodwill represents the excess of the consideration paid over the fair value of assets and liabilities of industrial undertaking situated at Mahad, Aurangabad and Pithampur. This Goodwill is being tested for impairment at each balance sheet date.

v) Details of investments subsidiary/ joint venture/ associate (at cost)

a) Ipca Pharmaceuticals, Inc. USA

b) Ipca Laboratories (U.K.) Ltd.,U.K.

During the financial year 2003-04, Company incorporated this wholly owned subsidiary to apply and obtain product registrations in the United Kingdom. During the year 2011-12, this subsidiary acquired 100% share capital of Onyx Research Ltd., holding company of Onyx Scientific Ltd. During the year 2015-16, Onyx Research Chemicals Ltd. , UK merged with its holding company Ipca Laboratories (UK) Ltd. and consequent to this, Onyx Scientific Ltd. has now become wholly owned subsidiary of this Company. During the year 2017-18, Onyx Scientific Ltd. has accquired 10% Share Capital of Pisgah Laboratories Inc. USA.

c) Ipca Pharma Nigeria Ltd. Nigeria

During the year 2006-07, the Company acquired the entire share capital of its stepdown subsidiary Ipca Pharma Nigeria Ltd. Thus, Ipca Pharma Nigeria Ltd became wholly owned subsidiary of the Company with effect from 31st January, 2007. The company was incorporated as a private company in Nigeria. It commenced commercial operations in December 2001. It is engaged in importation and marketing of formulations and APIs in the Nigerian market.

d) Ipca Pharma (Australia) Pty Ltd. Australia

e) Ipca Pharma (NZ) Pty Ltd., New Zealand

The Company was incorporated to hold formulation dossier registrations in New Zealand and to distribute formulations manufactured by the Company in the New Zealand market. This company is wholly owned subsidiary of Ipca Pharma (Australia) Pty Ltd.

f) Ipca Pharmaceuticals Ltd. SA de CV. Mexico

This subsidiary company was setup during the year 2008-09 as wholly owned subsidiary of the Company to hold formulations dossier registrations and promotion of pharmaceuticals manufactured by the Company in the Mexican market. This Company is currently in the process of registration of dossiers in Mexico.

g) Tonira Exports Limited

Tonira Exports Ltd. was incorporated as a wholly owned subsidiary of Tonira Pharma Ltd. The Company acquired management control of Tonira Pharma Ltd. in May 2008. Upon merger of Tonira Pharma Ltd. with the Company in the year 2011-12, Tonira Exports Ltd has become wholly owned subsidiary of the Company. This Company is presently not into any business.

h) Avik Pharmaceutical Ltd.

i) Trophic Wellness Pvt. Ltd.

Trophic Wellness Pvt. Ltd. was incorporated in 2010 and is headquartered in Mumbai, India. The Company has acquired shareholding to the extent of 19.26 % in Trophic Wellness Pvt. Ltd. during the year 2010-11. Trophic Wellness Pvt. Ltd. is engaged in the manufacturing and marketing of neutraceuticals with its manufacturing unit situated in Sikkim.

j) Krebs Biochemicals & Industries Ltd.

Krebs Biochemicals and Industries Ltd. was established in 1991. During the financial year 2014-15, Krebs Biochemicals and Industries Ltd. became an associate company. The Company is presently holding 29.83% shares in this company. Krebs undertakes both contract manufacturing for large pharmaceutical and multinational companies and develops products for sale in global markets. Krebs is listed on NSE and BSE and is headquartered in Vishakapatnam, India with manufacturing plants in Nellore and Vizag. Expertise and infrastructure in the areas of chemical synthesis, fermentation and enzymatic technologies along with a focus on cost and quality makes Krebs a logical partner of the Company for the development and supply of products made using one or more of these technologies.

iii) Rights and obligations of shareholders

The Company has only one class of share referred as equity shares having a par value of Rs.2/- per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after payment of external liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders. The dividend is recommended by management which is subject to shareholderâs approval at the Annual General Meeting.

The Board of directors in their meeting held on May 29, 2018 have recommended a dividend of Rs.1/- per equity share (previous year Rs.1/-) to be approved by the shareholders in the ensuing Annual General Meeting. On approval, this will result in an outflow of Rs.15.23 crores including dividend tax.

Nature and purpose of each reserve Capital Reserve

During amalgamation / merger / acquisition, the excess of net assets taken, over the consideration paid, if any, is treated as capital reserve.

Securities Premium

Capital Redemption Reserve

Debenture Redemption Reserve

The Company is required to create a debenture redemption reserve out of the profits which is available for payment of dividend. This reserve was transferred to general reserve on redemption of debentures.

Share Options Outstanding Account

The Company has established various equity settled share based payment plan for certain categories of employees.

General Reserve

Retained Earning

Effective portion of cash flow hedges

The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on the changes of the fair value of the designated portion of the hedging instruments that are recognised and accumulated under the cash flow hedge reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basis adjustment to the non-financial hedged item.

Other items of OCI

This reserve represents exchange differences arising on account of conversion of foreign operations to Companyâs functional currency.

c) Details of securities and repayment terms of secured loans stated above

(i) Debentures

Secured by first mortgage and pari-passu charge over Companyâs office premises at Ahmedabad, Gujarat and first charge by way of equitable mortgage charge on immovable properties being land and building situated at Sejavata, Ratlam and Polo Ground, Indore, both in the state of Madhya Pradesh; Village Athal & Village Piparia (Silvassa); plot no. 48, plot no. 142-AB, plot no. 123, plot no. 125 & plot no. 126 ABCD at Kandivli Industrial Estate in Mumbai and at Dehradun in the state of Uttarakhand. Redeemable in 4 equal annual instalments of Rs.5.00 crores at the end of 2nd year, 3rd year,4th year and 5th year from the date of issue i.e. December 12, 2012.

(ii) Foreign currency term loans

1 BNP PARIBAS, Singapore Branch

Secured by first pari passu charge by way of hypothecation of movable fixed assets both present and future Including Pithampur Plant(Indore). Repayable in 13 equal quarterly instalments from June 30, 2017.

2 DBS BANK, Singapore Branch

Secured by first pari passu charge by way of hypothecation of all the movable fixed assets both present and future. Repayable in 17 equal quarterly instalments from September 16, 2014.

3 Citibank N.A., Jersey

Secured by first pari passu charge over movable assets of the company except assets at Unit II at Sikkim plant and specific machines at Athal and Ratlam which are financed under buyer credit. Repayable in 16 equal quarterly instalments from June 15, 2019.

4 HSBC Bank Mauritius Ltd.

a. Secured by first pari-passu charge over current and future movable fixed assets of the Company except assets at Pithampur, Indore and at Baroda. Repayable in 9 equal quarterly instalments from September 26, 2016.

b. Secured by first pari-passu charge over current and future movable fixed assets of the Company except assets at Pithampur, Indore and at Baroda. Repayable in 13 equal quarterly instalments from November 19, 2014.

c. Secured by first pari-passu charge over current and future movable fixed assets of the Company except assets at Pithampur, Indore and at Baroda. Repayable in 16 equal quarterly instalments from September 30, 2015.

d. Secured by first pari-passu charge over current and future movable fixed assets of the Company except assets at Baroda. Repayable in 11 half yearly un-equal instalments from December 08, 2016.

5 Standard Chartered Bank- London

Secured by first pari-passu charge on movable fixed assets at companyâs API plant at Baroda and Formulation plant at SEZ Pithampur and the specific and exclusive charge on the unit II at Sikkim. Repayable in 16 quarterly equal instalments from February 15, 2018.

6 United Overseas Bank Ltd.

Secured by first pari passu charge by way of hypothecation on movable fixed assets both present and future Including Pithampur plant (Indore). Repayable in 4 equal half yearly instalments from June 29, 2018.

(iii) Buyerâs credit - Standard Chartered Bank

Exclusive Charge by way of hypothecation on specific movable fixed assets financed through this Buyersâ Credit. Repayable 10% at end of 12 months, 45% at end of 24 months and balance 45% at end of 36 months from the date of drawdown.

3.1(i) Disclosure in accordance with Ind AS - 19 âEmployee Benefitsâ, of the Companies (Indian Accounting Standards) Rules, 2015.

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 recognised funds in India. The company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk

Market risk (discount risk)

Longevity risk

Actuarial risk

Salary Increase Assumption: Actual Salary increase that are higher than the assumed salary escalation, will result in increase to the obligation at a rate that is higher than expected.

The following table summarizes the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet.

The rate used to discount post-employment benefit obligations is determined by reference to market yields at the end of the reporting period on government bonds.

Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase and mortality.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

(ii) Employee stock option plans

The Company has a stock option plan that provides for the granting of stock options to qualifying permanent employees including Wholetime Non- Promoter Director of the Company. The option plan is summarized below:

The Board of Directors at the meeting held on April 25, 2017 have granted 1,65,000 (One lakh sixty five thousand) option under Ipca Laboratories Limited -Employees Stock Option Scheme- 2014 (ESOS). The Option granted would be vested on completion of 1 year from the date of grant of the option. Therefore, as at the Balance sheet date there were no options exercisable as the balance contractual life was less than one year.

The option granted are pursuant to Ipca laboratories Limited - Employee Stock Option Scheme -2014 (ESOS) and subject to all applicable laws, rules and regulations and also subject to such approvals as may be required under such laws, rules and regulations, as in force from time to time.

The compensation cost for ESOS-2014 has been recognized based on the fair value at the date of grant in accordance with the Black-Scholes method determine by an independent merchant banker.

All the options are granted on a single date, which vest at the expiry of one year and have exercise period of 2 months. However, the decision on exercise of the options is dependent on the expectations of economic gains based on future outlook prevailing at the time by the option grantees. We have considered the expected life of the option as the vesting period plus exercise period from the date of grant.

The Black -Scholes option-pricing model was developed for estimating fair value of trade options that have no vesting restrictions and are fully transferable. Since options pricing models require use of subjective assumptions, changes therein can materially affect fair value of the options. The options pricing models do not necessarily provide a reliable measurement of fair value of options.

The company has compiled the above information based on written confirmations from suppliers and have been determined to the extent such parties have been identified on the basis of the information available with the company. This has been relied upon by the auditors.

4. Disclosure in accordance with Ind AS - 17 âLeasesâ, of the Companies (Indian Accounting Standards) Rules, 2015.

The Company has taken various residential / godowns / offices premises (including furniture and fittings if any) under leave and license agreements. These generally range between 11 months to 3 years under leave and license basis. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in the statement of profit and loss under rent.

The Company has given certain plant and equipment under operating lease and the same is shown separately in property, plant & equipment.

5. Segment Reporting

Disclosure as required by Ind AS 108 âOperating Segmentâ, of the Companies (Indian Accounting Standards) Rules, 2015.

Based on the âmanagement approachâ as defined in Ind AS 108, the Chief Operating Decision Maker (CODM) evaluates the Companyâs performance in accordance with Ind AS âOperating Segmentâ, the Company has only one reportable operating segment i.e. pharmaceuticals. The additional disclosure is being made in the consolidated financial statements.

6. CSR expenditure:

a. Gross amount required to be spent by the Company during the year Rs.4.64 crores (previous year Rs.7.14 crores).

b. i) Amount spent by the Company during the year is as follows:

7. Goods and Services Tax

In accordance with Ind AS 18 on âRevenueâ and Schedule III to the Companies Act, 2013, sales for the year ended March 31, 2017 and for the period April 1, 2017 to June 30, 2017 were reported gross of excise duty and net of Value Added Tax (VAT) / sales tax. Excise duty was reported as a separate expense line item. Consequent to the introduction of Goods and Services Tax (GST) with effect from July 1, 2017, VAT / Central sales tax, excise duty etc. have been subsumed into GST and accordingly, the same is not recognised as part of sales in terms of Ind AS 18. This has resulted in lower reported sales in the current year in comparison to the sales reported under the pre - GST structure of indirect taxes. With the change in structure of indirect taxes, expenses are also being reported net of taxes. Accordingly, figures for the year ended and as on March 31, 2018 such as sales, expenses, elements of working capital (Inventories, other current assets / current liabilities) and ratios in percentage of sales are not comparable with the figures of the previous year.

8. Fair Value Hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised 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 group has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

9. Financial Risk Factors

The Companyâs business activities are exposed to a variety of financial risks: market/business risk, credit risk, exchange risk, etc. The Companyâs focus is to foresee the unpredictability of financial and business risks and seek to minimize potential adverse effects of these risks on its business and financial performance.

i. Business/ Market Risk

The primary business/market risk to the Company is the price risk and its ability to pass on the same to its customers. The Companyâs operations extend to a number of countries across the globe and its products pricing competitiveness is a primary factor for the acceptability of Companyâs products in those markets. The Company has a robust procurement process, which ensures that its pricing power is not adversely affected by price changes in the market place for its raw materials. The backward integration into manufacturing of several APIâs for its own use in the formulations manufacturing also works as a mitigating strategy for price risk faced by the Company.

The Companyâs products are also subjected to product liability claims/litigations. To mitigate these risks, the Company has obtained adequate Product Liability Insurance.

The Company, however, has a reduced risk from dependence on any single customer as no single customer or customer group accounts for more than 10% of Companyâs annual revenue. The Company also continuously forays into different markets/countries to reduce its dependence on any particular country or customer group. The Company also has a diversified therapeutic product portfolio and therefore no single product account for more than 10% of Companyâs annual revenue.

ii. Credit risk

iii. Interest risk

iv. Foreign currency risk

The Company continuously manages its risks associated with foreign currency by adopting various hedging strategies in consultation with internal and external experts. The Company has a system of regularly monitoring its currency wise exposures. The significant part of Companyâs receivables and borrowings are in US Dollars which operates as a natural hedge against each other. The Company has a policy not to borrow in a currency where it has no business exposure.

v. The unhedged foreign currency exposure is as follows:

10. Capital Management

For the purpose of the Companyâs capital management, capital includes paid-up equity share capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Companyâs capital management is to maximise the shareholdersâ value.

In order to achieve this overall objective, the Companyâs capital management, amongst other things, aims to ensure that it meets the financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the lending institutions to immediately call back the loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing the capital during the year ended March 31, 2018 and March 31, 2017.

During the year ended March 31, 2018 the Company has designated certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions. The related transactions for the balance in the cash flow hedging reserve are expected to occur and reclassified to revenue in the statement of profit and loss . However, as at March 31, 2018 , there are no transactions in the hedge reserve that are required to be reclassified to the revenue in the statement of profit & loss account.

If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be re-balanced by adjusting either the volume of the hedging instrument or the volume of the hedged item so that the hedged ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and accounted in the statement of profit and loss at the time of hedge relationship re-balancing.

11. The balance sheet, statement of profit and loss, cash flow statement, statement of changes in equity, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the company for the year ended March 31, 2018.

Mar 31, 2017

1. Segment Reporting

Disclosure as required by Ind AS 108 "Operating Segment", of the Companies (Indian Accounting Standards) Rules, 2015.

Based on the "management approach" as defined in Ind AS 108, the Chief Operating Decision Maker (CODM) evaluates the Company''s performance In accordance with Ind AS "Operating Segment", the Company has only one reportable operating segment i.e. Pharmaceuticals. The additional disclosure is being made in the consolidated financial statements.

*Note:- It includes Rs,4.38 crores (Previous year Rs,4.38 crores) towards interest and penalty demanded by excise department, Ankleshwar relating to erstwhile Tonira Pharma Limited since amalgamated with the Company and is not payable in accordance with the order passed by the Hon''ble Central Excise and Service Tax Appellate Tribunal (CESTAT), Ahmadabad. The Department had moved the Hon''ble Gujarat High Court against the said CESTAT order and as per the order of the said Hon''ble High Court, the Company has furnished a Bank Guarantee of Rs,2.00 crores (Previous year Rs,2.00 crores) to the Department.

2. Significant accounting judgments, estimates and assumptions

a. Judgments

In the process of applying the company''s accounting policies, management has made judgments, which have significant effect on the amounts recognized in the separate financial statements.

b. Taxes

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

c. Defined benefit plans (gratuity benefits)

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. For plans operated outside India, the management considers the interest rates of high quality corporate bonds in currencies consistent with the currencies of the post-employment benefit obligation with at least an ''AA'' rating or above, as set by an internationally acknowledged rating agency, and extrapolated as needed along the yield curve to correspond with the expected term of the defined benefit obligation. The underlying bonds are further reviewed for quality. Those having excessive credit spreads are excluded from the analysis of bonds on which the discount rate is based, on the basis that they do not represent high quality corporate bonds.

3. First-time adoption of Ind AS

These financial statements, for the year ended March 31, 2017, are the first financial statements the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2017, together with the comparative period data as at and for the year ended March 31, 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at April 1, 2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its previous GAAP financial statements, including the balance sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31, 2016.

A. Exemptions applied

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:

i. The Company has elected to apply the exemption for deemed cost of property, plant and equipment contained in D7AA of Ind AS 101 by considering the previous GAAP carrying values as deemed costs. Accordingly the Net block as at March 31,2015 as per the previous GAAP have been considered as the deemed cost as at April 1, 2015 and are being depreciated over the residual useful life on a straight line basis.

ii. Ind AS 101 permit cumulative translating gains and losses to be reset to zero at the transition date. This provides relief from determining cumulative currency translation difference in accordance with Ind AS 21.

iii. The Company has designated unquoted equity instruments held at April 01, 2015 as fair value through P&L.

D Notes to effect of first time adoption

i) FVTPL Financial assets

Under Indian GAAP, the Company accounted for long term investments and mutual funds in unquoted and quoted equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Company has designated such investments other than investments in subsidiaries/ joint ventures and associates as FVTPL investments. Ind AS requires FVTPL investments to be measured at fair value. At the date of transition to Ind AS, difference between the instruments fair value and previous GAAP carrying amount has been recognized under retained earnings.

On this account of this adjustment the retained earnings increased by Rs, 0.46 crore as at March 31, 2016 and is decreased by Rs, 0.50 crore as at April 01, 2015.

ii) Trade Receivables

As per Ind AS 109, the Company is required to apply expected credit loss model for recognizing the allowance for doubtful debts. As a result, the allowance for doubtful debts is Rs, (0.18) crore as at March 31, 2016 and Rs, 0.81 crore as at April 01, 2015.

iii) Defined benefit liabilities

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. Accordingly Rs, (12.09) crores net of tax thereon has been adjusted in other comprehensive income from retained earnings as at April 01, 2015. The adjustment for the year ended March 31, 2016 is Rs, 1.35 crores net of the tax effect thereon. As a result of this change, the retained earnings as at April 01, 2015 and profit for the year ended March 31, 2016 has been adjusted. There is no impact on the total equity as at March 31, 2016.

iv) Foreign currency translation reserve

Under Indian GAAP, the Company recognized translation differences on foreign operations in a separate component of equity. Under Ind AS, the balance appearing in the foreign currency reserve has been reset to zero as at April 1, 2015 by transfering the same to retained earnings. Accordingly, foreign currency translation reserve balance under previous GAAP has been transferred to retained earnings. There is no impact on total equity as a result of this adjustment.

v) Borrowings

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

Accordingly, the upfront fees has been amortised over the loan period as against charge to the profit and loss statement in the initial year. On account of this change, retained earnings as at April 01, 2015 has been increased by Rs, 3.22 crores with consequent adjustment of the upfront fees as prepaid expenses to be amortised over the period of the loan.

vi) Provisions for expiry, returns and breakage/ damage

The Company has estimated probable expiry, returns and breakage/ damage based on past trends and has made provision thereon as required by Ind AS 18 "Revenue recognition". On account of this change, the retained earnings as at April 01, 2015 has been decreased by Rs, 45.07 crores with consequent increase in provision. The impact for the year ended March 31, 2016 is Rs, 2.28 crores on the profit for the year with corresponding effect on the balance of provisions.

vii) Deferred tax

Consequent impact on deferred tax arising out of various adjustments under Ind AS has been given in accordance with Ind AS 12 "Income Taxes". On the date of transition the net impact of deferred tax is Rs, 15.88 crores which is adjusted against retained earnings. For the year ended March 31, 2016 the impact on profit arising out of deferred tax changes is Rs, 2.22 crores.

viii) Excise duty

Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is accounted as a cost under other expenses. Thus sale of goods under Ind AS has increased by Rs, 31.74 crores in March 2016 with a corresponding increase in other expense. There is no impact on total equity.

ix) Statement of cash flows

The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.

x) Proposed Dividend

Under the previous GAAP, 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 was recognized as a liability as at March 31, 2015. 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 of Rs, 12.62 crores and Rs, 2.57 crores tax liability as at March 31, 2015 has been reversed back to retained earnings. The same is charged to retained earnings during the year ended March 31, 2016 on approval by the shareholders. There is no impact on equity as at March 31, 2016.

xi) Goodwill

Under Ind AS goodwill on business acquisition is not required to be amortized but is to be tested for impairment. Accordingly, amortization of goodwill during March 31, 2016 has been reversed and the goodwill is carried at April 01, 2015 values. On account of this profit for the year March 31, 2016 is higher by Rs, 8.49 crores.

xii) Security deposits

Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value. Accordingly, the group has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognized as prepaid rent. Consequent to this change, the amount of security deposits increased by Rs, 0.80 crores as at March 31, 2016 and decreased by Rs,18.45 crores as at April 01, 2015. The prepaid rent decreased by Rs, 1.76 crores as at March 31, 2016 and increased by Rs, 18.17 crores as at April 01, 2015. The net impact on retained earnings as at April 01, 2015 is decrease of Rs, 0.27 crores and the impact on profit for the year ended March 31, 2016 is decrease of Rs, 0.96 crores.

xiii) Retained earning

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

4. Standards issued but not yet effective

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, ''Statement of cash flows'' and Ind AS 102, ''Share-based payment.'' These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ''Statement of cash flows'' and IFRS 2, ''Share-based payment'', respectively. The amendments are applicable to the Company from April 1, 2017.

Amendment to Ind AS 7:

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.

The Company is currently evaluating the requirements of the amendment and has not yet determined the impact on the financial statements.

Amendment to Ind AS 102:

The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.

It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting conditions are reflected in the ''fair values'', but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement. The Company is currently evaluating the requirements of the amendment and has not yet determined the impact on the financial statements.

5. Fair Value Hierarchy

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

6. Financial Risk Factors

The Company''s business activities are exposed to a variety of financial risks: Market/ Business risk, credit risk, Exchange risk, etc. The Company''s focus is to foresee the unpredictability of financial and business risks and seek to minimize potential adverse effects of these risks on its business and financial performance.

i. Business/ Market Risk

The primary business/ market risk to the Company is the price risk and its ability to pass on the same to its customers. The Company''s operations extend to a number of countries across the globe and its products pricing competitiveness is a primary factor for the acceptability of Company''s products in those markets. The Company has a robust procurement process, which ensures that its pricing power is not adversely affected by price changes in the market place for its raw -materials. The backward integration into manufacturing of several API''s for its own use in the formulations manufacturing also works as a mitigating strategy for price risk faced by the Company.

The Company''s products are also subjected to product liability claims/ litigations. To mitigate these risks, the Company has obtained adequate Product Liability Insurance.

The Company, however, has a reduced risk from dependence on any single customer as no single customer or customer group accounts for more than 10% of Company''s annual revenue. The Company also continuously forays into different markets/ countries to reduce its dependence on any particular country or customer group. The Company also has a diversified therapeutic product portfolio and therefore no single product account for more than 10% of Company''s annual revenue.

ii. Credit Risk

The Company has exposure to credit risks associated with sales to various developing markets/ countries. To mitigate these credit risks arising out of this, the Company obtains credit insurance on a regular basis after evaluating the credit risk associated with a country/ customer. Country/ customer where no credit insurance is available, the Company monitors such risk by continuously monitoring its exposure to such country/ customer. There was no historically significant credit risk in the domestic market for the Company. Based on the historical data, the Company has made adequate provisions for expected loss because of credit risk, which is neither significant nor material.

iii. Interest Risk

iv. Foreign Currency Risk

The company continuously manages its risks associated with foreign currency by adopting various hedging strategies in consultation with internal and external experts. The Company has a system of regularly monitoring its currency wise exposures. The significant part of Company''s receivables and borrowings are in US Dollars which operates as a natural hedge against each other. The Company has a policy not to borrow in a currency where it has no business exposure.

7. Capital Management

No changes were made in the objectives, policies or processes for managing the capital during the years ended March 31, 2017 and March 31, 2016.

8. The Balance Sheet, Statement of Profit and Loss, Cash Flow Statement, Statement of changes in equity, Statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended March 31, 2017.

Mar 31, 2016

I) Rights and obligations of shareholders

The Company has only one class of share referred as Equity shares having a par value of Rs, 21- per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after payment of external liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders.

* Debenture redemption reserve is maintained in accordance with the Companies (Share capital & Debenture) Rules, 2014.

** General Reserve represents the reserve created in accordance with Companies (Transfer of Profits to Reserves) Rules, 1975.

*** Hedging Reserve represents the fair value changes of hedging instruments that are designated and effective as hedges of future cash flows. **** Exchange difference arising on a monetary item that, in substance, forms part of an enterprise''s net investments in a non-integral foreign operation are accumulated in foreign currency translation reserve.

* During the previous year, part amount of the loan to I pea Laboratories (U.K.) Limited has been converted to preference capital.

a) Share application money pending allotment of the previous year represents amount invested in Krebs Biochemical''s & Industries Limited, an associate, for allotment of 23,00,000 fully paid equity shares of Rs, 10/-each, which are alloted on 9th May, 2015.

b) Deposit includes Rs, 45.00 crores (previous year Rs, 39.44 crores) given as lease deposit for two manufacturing facilities of Krebs Biochemicals & Industries Limited taken on lease by the Company.

Valuation methodology

Raw materials and packing materials Lower of cost and Net realisable value. However materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on First-in-First-out basis.

Work-in-process and finished goods At lower of cost including material cost net of CENVAT, labour cost and all overheads other than selling and distribution overheads and net realisable value. Excise duty is considered as cost for finished goods wherever applicable.

Stores and spares Stores and spare parts are valued at lower of purchase cost computed on First-in-First-out method and net realisable value.

Traded Goods Traded Goods are valued at lower of purchase cost and net realisable value.

Pursuant to the retrospective amendment to the Payment of Bonus Act, the Company was required to make provision for differential bonus for the year 2014-15 as per the amendment. However, various High Courts have granted interim stay to the applicability of the amendment for the year 2014-15. The Company has therefore not made provision for differential bonus for the year 2014-15. Provision for Bonus for the current year is made as per the amendment.

Note: a) In accordance with the provisions of Schedule II to the Companies Act 2013, effective from 1st April, 2014, the Company had revised the useful lives of its fixed assets. Asa consequence of such revision, the charge for depreciation is higher than the previously applied rates by Rs, 37.68 crores for the previous year. For assets that had completed the useful lives as a consequence of the aforesaid revision, the carrying value as on 1st April, 2014 of Rs, 13.26 crores had also been charged to the statement of profit and loss. The depreciation charged for the previous year is accordingly higher by Rs, 50.94 crores. b) The Company has revised the useful life of plant and machinery installed at its formulation plants based on certificate from technical expert from 15 years as per Schedule II to 20 years. Based on this revision depreciation for the year is computed on such assets. On account of this revision, depreciation for the year is lower by Rs, 14.53 crore and profit before tax is higher by similar amount.

1. Disclosure as required by Accounting Standard - AS 19 "Leases" of the Companies (Accounting Standards) Rules 2006.

The Company has taken various residential / god owns / offices premises (including Furniture and Fittings if any) under leave and license agreements. These generally range between 11 months to 3 years under leave and license basis. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in the Statement of Profit and Loss under Rent.

During the previous year the Company has taken on operating lease two manufacturing facilities of M/s. Krebs Biochemicals & Industries Limited for manufacturing of products at the said facilities. An amount of Rs, 45.00 crores (previous year Rs, 39.44 crores) has been paid as lease deposit. Since the lease is cancellable at the option of the Company, the further disclosure of committed lease payments are not made.

*Note: It includes Rs, 4.38 crores (Previous year Rs, 4.38 crores) towards interest and penalty demanded by excise department, Ankleshwar relating to erstwhile Tonira Pharma Limited since amalgamated with the Company and is not payable in accordance with the order passed by the Hon''ble Central Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad. The Department had moved the Hon''ble Gujarat High Court against the said CESTAT order and as per the order of the said Hon''ble High Court, the Company has furnished a Bank Guarantee of Rs, 2.00 crores(Previous year Rs, 2.00 crores) to the Department.

2. a) The Company has entered into various derivatives transactions, which are not intended for trading or speculative purpose but to hedge the export receivables including future receivables and foreign currency loan interest rate risks.

3. In the opinion of the Board of Directors, all the assets other than fixed assets and noncurrent investments have value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

4. The balance sheet, statement of profit and loss, cash flow statement, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended 31st March, 2016.

5. Previous year''s figures have been regrouped and rearranged wherever necessary to make them comparable.

Mar 31, 2015

I) Rights and obligations of shareholders

The Company has only one class of share referred as equity shares having a par value of Rs. 2/- per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after payment of external liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders.

* Debenture redemption reserve is maintained in accordance with the Companies (Share capital & Debenture) Rules, 2014.

** General Reserve represents the reserve created in accordance with Companies (Transfer of Profits to Reserves) Rules, 1975.

*** Hedging Reserve represents the fair value changes of hedging instruments that are designated and effective as hedges of future cash flows.

**** Exchange difference arising on a monetary item that, in substance, forms part of an enterprise''s net investments in a non-integral foreign operation are accumulated in foreign currency translation reserve.

ii) Disclosure u/s 186(4):

During the year the Company has invested in 18,00,000 equity shares of Krebs Biochemicals & Industries Limited(Krebs) which aggregate to 18.92% of total equity of Krebs.

The Company had already taken two of the plants of Krebs on lease basis before the acquisition of the stake and this acquisition will fortify the business interest of the Company.

Considering the business connection with Krebs and also the equity stake of 18.92%, the same is considered as an associate as per AS-23, Accounting for Investments in Associates in Consolidated Financials Statements.

The Company has also made an announcement for open offer as per the extant SEBI regulations.

The Company has paid share application money of Rs. 12.42 crores for 23,00,000 additional shares, which is since allotted on 9th May 2015. The share application money is disclosed under loans and advances.

a) Share application money pending allotment represents amount invested in Krebs Biochemicals & Industries Limited, an associate, for allotment of 23,00,000 fully paid equity shares of Rs. 10/- each, since alloted on 9th May, 2015.

b) Deposit includes Rs. 39.44 crores given as lease deposit for two manufacturing facilities of Krebs Biochemicals & Industries Limited taken on lease by the Company.

Note : In accordance with the provisions of Schedule II to the Companies Act 2013,effective from 1st April,2014, the Company has revised the useful lives of its fixed assets. As a consequence of such revision, the charge for depreciation is higher than the previously applied rates by Rs. 50.94 crores for the year. For assets that have completed the useful lives as a consequence of the aforesaid revision, the carrying value as on 1st April, 2014 of Rs. 13.26 crores had been charged to the opening balance of the surplus in statement of profit and loss in the first quarter alongwith the deferred tax effect thereon of Rs. 4.51 crores. The Management following the MCA circular no. GSR 627(E) dated 29th August, 2014 has decided to charge the amount of Rs. 13.26 crores as aforesaid to the Statement of profit & loss instead of charging the surplus in statement of profit & loss. The depreciation charged for the year is accordingly higher by Rs. 13.26 crores as compared to the disclosure in quarterly results.

2. Disclosure as required by Accounting Standard - AS 17 "Segment Reporting" of the Companies (Accounting Standards) Rules 2006.

In accordance with AS-17 "Segment Reporting", The Company has only one reportable primary business segment i.e. Pharmaceuticals. However, the Company has secondary geographical segment which is disclosed in Consolidated Financial Statements as per AS-17.

3. Disclosure as required by Accounting Standard - AS 19 "Leases" of the Companies (Accounting Standards) Rules 2006.

The Company has taken various residential / godowns / offices premises (including Furniture and Fittings if any) under leave and license agreements. These generally range between 11 months to 3 years under leave and license basis. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in the Statement of Profit and Loss under Rent.

During the year the Company has taken on operating lease two manufacturing facilities of M/s. Krebs Biochemicals & Industries Limited for manufacturing of products at the said facilities. An amount of Rs. 39.44 crores has been paid as lease deposit. Since the lease is cancellable at the option of the Company, the further disclosure of committed lease payment are not made.

*Note: It includes Rs. 4.38 crores (Previous year Rs. 4.38 crores) towards interest and penalty demanded by excise department, Ankleshwar relating to erstwhile Tonira Pharma Limited since amalgamated with the Company and is not payable in accordance with the order passed by the Hon''ble Central Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad. The Department had moved the Hon''ble Gujarat High Court against the said CESTAT order and as per the order of the said Hon''ble High Court, the Company has furnished a Bank Guarantee of Rs. 2.00 crores(Previous year Rs. 2.00 crores) to the Department.

4. In the opinion of the Board of Directors, all the assets other than fixed assets and non current investments have value on realisation in the ordinary course of business atleast equal to the amount at which they are stated in the Balance Sheet.

5. The balance sheet, Statement of profit and loss, cash flow statement, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended 31st March''2015.

6. Previous year''s figures have been regrouped and rearranged wherever necessary to make them comparable.

Note : In accordance with the provisions of Schedule II to the Companies Act 2013, effective from 1st April, 2014, the Company has revised the useful lives of its fixed assets. As a consequence of such revision, the charge for depreciation is higher than the previously applied rates by Rs. 50.94 crores for the year. For assets that have completed the useful lives as a consequence of the aforesaid revision, the carrying value as on 1st April, 2014 of Rs. 13.26 crores had been charged to the opening balance of the surplus in statement of profit and loss in the first quarter alongwith the deferred tax effect thereon of Rs. 4.51 crores. The Management following the MCA circular no. GSR 627(E) dated 29th August, 2014 has decided to charge the amount of Rs. 13.26 crores as aforesaid to the Statement of profit & loss instead of charging the surplus in statement of profit & loss. The depreciation charged for the year is accordingly higher by Rs. 13.26 crores as compared to the disclosure in quarterly results.

Notes:

a. The Segment Revenue in the geographical segments considered for disclosure are on the basis of customer location.

b. In the case of Segment asset and segment capital expenditure the amount attributable to geographical segment "Outside India" is less than 10% of the respective Total assets and Total capital expenditure of the reporting enterprise and hence not disclosed separately.

7. Disclosure as required by Accounting Standard - AS 19 "Leases" of the Companies (Accounting Standards) Rules 2006.

a) The Company has taken various residential / godowns / offices premises (including Furniture and Fittings if any) under leave and licence agreements. These generally range between 11 months to 3 years under leave and licence basis. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in the Statement of Profit and Loss under Rent.

b) During the year the Company has taken on operating lease two manufacturing facilities of M/s. Krebs Biochemicals & Industries Limited for manufacturing of products at the said facilities. An amount of Rs. 39.44 crores has been paid as lease deposit. Since the lease is cancellable at the option of the Company, the further disclosure of committed lease payment are not made.

8. Disclosure as required by Accounting Standard - AS 27 "Financial Reporting of Interest in Joint Ventures" of the Companies (Accounting Standards) Rules 2006.

The Company is holding 49.02% of Shares in Avik Pharmaceutical Ltd. It is a Jointly Controlled entity in which the Company has a control of 49.02%. In the standalone Balance Sheet of the Company, Joint Venture interest is reported under Long term Investment at Cost. Proportionate share of the Company as on 31st March, 2015 in the assets, liabilities, income, expenditure, contingent liabilities and capital commitments of the Joint Venture company is as follows:

9. The company''s provision for diminution in value of investments in shares of National Druggist (Proprietary) Ltd. and Ipca Pharmaceuticals (Shanghai) Ltd. for Rs. NIL (Previous year Rs. 0.39 crore) and Rs. 0.05 crore (Previous year Rs. 1.00 crore) respectively is reversed in these consolidated accounts since the full loss of the said subsidiaries is accounted in this accounts.

10. In the opinion of the Board of Directors, all the assets other than fixed assets and non current investments have value on realisation in the ordinary course of business atleast equal to the amount at which they are stated in the Balance Sheet.

11. The balance sheet, Statement of profit and loss, cash flow statement, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended 31st March''2015.

12. Previous year''s figures have been regrouped and rearranged wherever necessary to make them comparable.

Mar 31, 2014

1. Disclosure as required by Accounting Standard - AS 17 "Segment Reporting" of the Companies (Accounting Standards) Rules 2006.

In accordance with AS-17 "Segment Reporting" The Company has only one reportable primary business segment i.e. Pharmaceuticals. However, the Company has secondary geographical segment which is disclosed in Consolidated Financial Statements as per AS-17.

2. Disclosure as required by Accounting Standard - AS 19 "Leases" of the Companies (Accounting Standards) Rules 2006.

The Company has taken various residential/go downs/offices premises (including Furniture and Fittings if any) under leave and license agreements. These generally range between 11 months to 3 years under leave and license basis. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in the Statement of Profit and Loss under Rent.

3. Contingent liabilities and commitments not provided for in respect of:

As at As at Particulars 31/03/2014 31/03/2013 (Rs. Crores) (Rs. Crores)

A. Contingent Liabilities

a) Bills discounted with banks 256.40 237.09 Since Realised (103.77) (150.79)

b) Other moneys for which the Company is contingently liable for tax, excise, customs 16.44* 11.82* and other matters not accepted by the Company Amount deposited under protest (4.08) (0.05)

c) Claims against the Company not acknowledged as debts 2.95 2.98

d) Corporate Guarantee given to others 8.28 2.28

e) Guarantees given by banks in favour of Govt.& others/ Letter of Credit opened against 82.71 62.44 which goods are not received * 258.93 165.77

B. Estimated amount of contracts remaining to be executed on capital account and not provided for:

- Tangible Assets 155.45 45.39

- Intangible Assets 28.16 6.29

183.61 51.68

C. Uncalled liability on partly paid shares 3.40 3.40

D. Other Commitments - -

*Note:- It includes Rs. 4.38 crores (Previous year Rs. 4.38 crores) towards interest and penalty demanded by excise department, Ankleshwar relating to erstwhile Tonira Pharma Limited since amalgamated with the Company and is not payable in accordance with the order passed by the Hon''ble Central Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad. The Department had moved the Hon''ble Gujarat High Court against the said CESTAT order and as per the order of the said Hon''ble High Court, the Company has furnished a Bank Guarantee of Rs. 2.00 crores(Previous year Rs. 2.00 crores) to the Department.

4. In the opinion of the Board of Directors, all the assets other than fixed assets and non current investments have value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

5. The balance sheet, Statement of profit and loss, cash flow statement, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended 31 st March''2014.

6. Previous year''s figures have been regrouped and rearranged wherever necessary to make them comparable.

Mar 31, 2013

1. Disclosure as required by Accounting Standard - AS 17 "Segment Reporting" of the Companies (Accounting Standards) Rules 2006.

The entire operations of the Company relate to only one segment viz. pharmaceuticals. As such, there is no separate reportable segment under Accounting Standard - AS 17 on Segment Reporting.

2. Disclosure as required by Accounting Standard - AS 19 "Leases" of the Companies (Accounting Standards) Rules 2006.

The Company has taken various residential / godowns / office premises (including Furniture and Fittings if any) under leave and license agreements. These generally range between 11 months to 3 years on leave and license basis. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognised in the Statement of Profit and Loss under Rent.

3. Disclosure as required by Accounting Standard - AS 20"Earning Per Share"of the Companies (Accounting Standards) Rules 2006.

The earning per share is calculated by dividing the profit after tax by weighted average no. of shares outstanding for basic & diluted EPS.

4. a) The Company has entered into various derivatives transactions, which are not intended for trading or speculative purpose but to hedge the export receivable including future receivables and foreign currency loan interest rate risks.

b) The Company has continued its decision not to exercise the option available under amendment to AS 11 relating to "The effects of Changes in Foreign Exchange Rates" in respect of its Long Term Foreign Currency Monetary Items in respect of foreign currency loans for the acquisition of fixed assets.

c) The Company has following unhedged foreign exchange risk.

d) The Company has an annual average exports of USD 315 Million (Previous year USD 291 Million) of which the Company has partially hedged its receivables by the aforesaid options disclosed in para (a) above. The unhedged currency risk detailed in para (c) above has a natural hedge against the unhedged export receivables of USD 19.20 Million as at 31st March,2013 (Previous year USD 4.58 Million).

5. In the opinion of the Board of Directors, all the assets other than fixed assets and non current investments have value on realisation in the ordinary course of business atleast equal to the amount at which they are stated in the Balance Sheet.

6. The balance sheet, Statement of profit and loss, cash flow statement, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended 31st March''2013.

7. Previous year''s figures have been regrouped and rearranged wherever necessary to make them comparable.

Mar 31, 2012

A) Aggregate Shares issued under Employees Stock Option Scheme (ESOS) : 21,08,750 Equity Shares of Rs.2/- each (Previous year 19,87,500 Equity Shares)

b) Equity Share of Rs.10 each have been sub-divided into five equity shares of Rs.2/- each pursuant to the resolution passed by the shareholders at the Extra Ordinary General Meeting held on 25th February, 2010.

c) 53,210 Equity Shares of Rs. 10 each in 2009-10 and 2,03,009 Equity Shares of Rs. 10/- each in 2008-09 have been extinguished under Buy back Scheme.

d) The outstanding equity shares to be issued aggregating to Rs.0.06 crore representing 3,22,704 equity shares of Rs. 2/- each of the Company under the scheme of amalgamation of Tonira Pharma Ltd. with the Company is shown as Equity Share Suspense account under Share Capital.

e) As per the Scheme of Amalgamation, the authorised share capital of Tonira Pharma Limited of 1,20,00, 000 equity shares of Rs.10/- each is added to the Authorised Share Capital of the Company as 6,00,00,000 equity shares of Rs 2/- each amounting to Rs. 12.00 Crores.

# Due to corporate action on 23rd March,2010 for sub-division of 1 fully paid up equity share of Rs. 10/- each into 5 fully paid up equity shares of Rs.2/- each,each of the outstanding options now represent a right but not an obligation to the option grantee to apply for 5 fully paid up equity shares of Rs.2/- each of the Company at exercise price duly adjusted for the said corporate action.

I) Merger of Tonira Pharma Limited with the Company

Pursuant to scheme of amalgamation ('the scheme') of Tonira Pharma Limited (TPL) with Ipca Laboratories Limited (ILL) under the provisions of Sections 391 to 394 of the Companies Act, 1956 as sanctioned by the Honorable High Court of Judicature of Bombay vide its order dated 30th March, 2012 and by the Honorable High Court of Judicature of Gujarat vide its order dated 2nd April'2012, which orders have been filed with the Registrar of Companies on 15th and 16th of May, 2012, respectively, to make the scheme effective, all the assets and liabilities of the said TPL were transferred to and vested in the Company as a going concern with effect from the appointed date i.e. 1st April'2011. Accordingly, this scheme of amalgamation has been given effect to in these accounts.

Salient Features of the scheme of Amalgamation

TPL was engaged in the business of manufacturing/marketing of Drug Intermediates and Active Pharmaceutical Ingredients. ILL is engaged in the business of manufacturing/marketing of Drug Intermediates, Active Pharmaceutical Ingredients and Pharmaceutical formulations.

The appointed date for the purpose of this amalgamation is 1st April, 2011

In accordance with the scheme approved, the accounting for this amalgamation has been done in accordance with the "Pooling of Interest Method" referred to in Accounting Standard 14- "Accounting for Amalgamation" of the Companies (Accounting Standards) Rules, 2006.

Accordingly, ILL has accounted for the Scheme in its books of accounts with effect from the Appointed Date i.e. 1st April, 2011 as under :

i) With effect from the Appointed Date, all assets and liabilities appearing in the books of accounts of TPL have been transferred to and vested in ILL and have been recorded by ILL at their respective book values.

ii) In consideration of the transfer of the business as a going concern, the Company shall issue 6 fully paid-up equity shares of Rs. 2/- each of the Company for every 100 equity share of Rs. 10/- each fully paid-up of TPL to the equity shareholders of TPL. Pending allotment, the outstanding equity shares to be issued aggregating to Rs.0.06 crore representing 3,22,704 equity shares of Rs. 2/- each of the company is shown as Equity Share Suspense account under Share Capital.

iii) The equity shares in TPL held by the Company have been cancelled under the scheme.

iv) The difference between the book value of net identifiable assets and liabilities of TPL transferred to ILL pursuant to this scheme and the consideration being the value of New Equity Shares to be issued & allotted by ILL amounting to Rupees 0.55 Crore has been credited to capital reserve account.

v) Accordingly, 3,22,704 equity shares of ILL of Rs. 2/- each fully paid up are to be issued to the shareholders of TPL under this amalgamation. The record date fixed for this purpose is 31st May, 2012.

vi) All inter company transactions have been eliminated on incorporation of the accounts of TPL in the Company.

vii) The Company shall proceed to issue these equity shares to the shareholders of TPL in due course of time.

viii) The transactions of the business of TPL with effect from 1st April, 2011 have been incorporated in the Company's accounts on the basis of the Audited Financial Statements of the business, which is treated as a Company's Branch, as audited by M/s Mitesh P Vora & Co. Chartered Accountants, the statutory auditors of the erstwhile TPL. They were appointed by the Board of Directors of the Company as its Branch Auditors.

In view of the aforesaid amalgamation, the figures for the current year are not strictly comparable to those of the previous year.

A. Share Application Money Pending Allotment

The share application money pending allotment of Rs. 10,500 is received as commitment deposit from employees/directors under Employee Stock Option scheme (ESOS) on grant of stock options pending allotment.

The above ESOS is in accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) guidelines, 1999.

52,500 shares of Rs. 2.00 each are to be issued against the commitment money so received at an exercise price of Rs.63 per share.

The company has sufficient authorised capital to cover the share capital amount on allotment of shares out of share application money.

The above 52, 500 shares are to be issued at a premiun of Rs. 61 per share.

The shares will be allotted in accordance with the scheme before 31st March, 2013.

a) Security and repayment terms

i) Debentures

12.75% Secured Redeemable Non-Convertible Debentures amounting to Rs 33.33 Crores (Previous year Rs. 50.00 Crores) - Redeemble in 3 equal annual instalments of which one instalment is paid. Secured by mortgage over Company's office premises at Ahmedabad, Gujarat, first pari passu charge over movable & immovable properties at Dehradun & pari passu first charge on Company's plant & machinery at Ratlam. The schedule of repayment is : 26th December, 2013 Rs.16.66 Crores ; 26th December, 2012 Rs.16.67 Crores.

9.95% Secured Redeemable Non-Convertible Debentures of Rs.50.00 Crores (Previous year Rs. NIL) - Redeemble at the end of 3rd year by exercising put/call option or, at the end of 5th year, both from the date of issue i.e. 3rd October 2011. Secured by mortgage over Company's office premises at Ahmedabad, Gujarat and first pari-passu charge over movable property of the Company includes plant & machinery situated at Ratlam, Athal (Silvassa), Indore (M.P.), Piparia (Silvassa), Pithampur (Indore) and Dehradun.

ii) Rupee Term Loan

HDFC Bank Ltd.- Rs. NIL (Previous year Rs. 18.67 Crores) Repayble in 15 equal quarterly instalments from 16th May,2009, secured by first pari passu charge by way of hypothecation of movable fixed assets both present and future except on movable fixed assets at Pithampur, Indore. The said loan is prepaid before the Balance sheet date.

Bank of Baroda - Rs. NIL (Previous year Rs.15.00 Crores) Repayble in 3 equal annual installments from 30th March,2012, secured by first charge by way of equitable mortgage of land and building of the Company situated at Indore(except Pithampur), Dehradun, Ratlam, Mumbai, Athal & Piparia. The said loan is prepaid before the Balance sheet date.

iii) Foreign Currency Term Loan

ICICI Bank Offshore Banking Unit - Rs. 7.64 Crores(Previous year Rs. 20.07 Crores) Repayable in 8 semi annual instalments from 10th October,2008, secured by exclusive charge on the entire movable fixed assets at SEZ, Indore, Pithampur and pari passu first charge on movable fixed assets at Kandla.

BNP PARIBAS, Singapore Branch - a) Rs.50.88 Crores (Previous year Rs.56.49 Crores) Repayable in 4 equal semi annual installments from 20th March,2013 , secured by first pari passu charge by way of hypothecation of movable fixed assets both present and future except on movable fixed assets at Pithampur, Indore.

b) Rs.50.88 Crores (Previous year Rs. NIL) Bullet Repayment at the end of 5th year on 6th October,2016 ,Secured by first pari passu charge by way of hypothecation of movable fixed assets both present and future except on movable fixed assets at Pithampur, Indore.

CITI Bank N.A. Bahrain Branch - Rs.19.99 Crores (Previous year Rs. 22.30 Crores) Repayable in 14 equal quarterly installments from 21st July,2011, secured by first pari passu charge by way of hypothecation of all the movable fixed assets both present and future except on movable fixed assets at Pithampur, Indore.

DBS Bank, Singapore Branch - Rs. 34.09 Crores (Previous year Rs. 39.69 Crores) Repayable in 9 semi annual instalments from 16th March,2011, secured by first pari passu charge by way of hypothecation of all the movable fixed assets both present and future except on movable fixed assets at Pithampur, Indore.

Barclays Bank PLC, London Branch - Rs. 50.88 Crores (Previous year Rs. 44.60 Crores) Repayable in 13 quarterly installments from 24th May,2012, secured by first pari passu charge on the plant & machinery of the Company except assets at Pithampur, Indore.

HSBC Mauritius - Rs. 101.76 Crores (Previous year Rs. NIL) Repayable in 7 half yearly installments from 31st July,2013, secured by first pari passu charge on the plant & machinery of the Company except assets at Pithampur, Indore.

Loans and advances to subsidiary companies (Sr. No. i to iv) are without interest and there is no repayment schedule fixed. Loans and advances to subsidiary/associate (Sr. No. v to x) are interest bearing loans.

b) Investment by the loanee in the shares of the Company :

None of the loanees have, per se , made investments in the shares of the Company.

To align the depreciation policy and the rates of the amalgamating (transferee) Company with those of the amalgamated (transferor) Company, the depreciation hitherto charged on the assets of the amalgamated Company has been reviewed and differential depreciation as compared to the policy and rates of the amalgamated Company is written back as at 01/04/2011, being the appointed date. The differential depreciation charged in the books of the amalgamating Company as compared to the method and rates followed by the amalgamated Company is Rs. 5.70 crores and is written back to the profit and loss account under the head depreciation. The Depreciation for the year is therefore lower and the Profit and Balance in Reserves and Surplus is higher by Rs. 5.70 crores.

1. Disclosure as required by Accounting Standard - AS 17 "Segment Reporting", issued by the Institute of Chartered Accountants of India

The entire operations of the Company relate to only one segment viz. pharmaceuticals. As such, there is no separate reportable segment under Accounting Standard - AS 17 on Segment Reporting.

2. Disclosure as required by Accounting Standard - AS 19 "Leases", issued by the Institute of Chartered Accountants of India

The Company has taken various residential / godowns / offices premises (including Furniture and Fittings, if any) under leave and licence agreements. These generally range between 11 months to 3 years under leave and licence basis. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in the Statement of Profit and Loss under Rent.

3. Contingent liabilities and commitments not provided for in respect of :

Particulars 2011 -2012 2010 -2011 Rupees in Crores Rupees in Crores

A. Contingent Liabilities

a) Bills discounted with banks 147.24 106.95

Since Realised (85.08) (47.85)

b) Other moneys for which the Company is contingently liable for tax, excise, customs 18.53* 11.39 and other matters not accepted by the Company

c) Claims against the Company not acknowledged as debts. 0.01 0.01

d) Corporate Guarantees given to bankers of associates - 30.00 and subsidiaries for which the Company holds counter guarantees.

e) Corporate Guarantee given to others 2.28 2.28

f) Guarantees given by banks in favour of Government 65.74 96.75 and others/ Letter of Credit opened against which goods are not received *

148.72 199.53 B. Estimated amount of contracts remaining to be executed on capital account and not provided for :

- Tangible Assets 52.04 78.70

- Intangible Assets 2.44 5.08

54.48 83.78

C. Uncalled liability on partly paid shares 4.48 4.48

D. Other Commitments - -

*Note : It includes Rs. 4.38 crores towards interest and penalty demanded by excise department, Ankleshwar and is not payable in accordance with the order passed by the Hon'ble Central Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad. The Department had moved the Hon'ble Gujarat High Court against the said CESTAt order and as per the order of the said Hon'ble High Court, the Company has furnished a Bank Guarantee of Rs. 2.00 crores to the Department. The Bank guarantee is obtained from Corporation Bank, Kandivali against 100% margin in the form of Fixed Deposit Receipt (FDR).

4. a) The Company has entered into various derivatives transactions, which are not intended for trading or speculative purpose but to hedge the export receivable including future receivables and foreign currency loan interest rate risks.

b) The Company has continued its decision not to exercise the option available under amendment to AS 11 relating to "The effects of Changes in Foreign Exchange Rates" in respect of its Long Term Foreign Currency Monetary Items in respect of foreign currency loans for the acquisition of fixed assets.

d) The Company has an annual average exports of USD 291 Million (Previous year USD 224 Million) of which the Company has partially hedged its receivables by the aforesaid options disclosed in para (a) above. The unhedged currency risk detailed in para (c) above has a natural hedge against the unhedged export receivables of USD 4.58 Million (Previous year USD 17.63 Million) as at 31st March, 2012.

5. In the opinion of the Board of Directors, all the assets other than fixed assets and non current investments have value on realisation in the ordinary course of business atleast equal to the amount at which they are stated in the Balance Sheet.

6. The balance sheet, Statement of profit and loss, cash flow statement, statement of significant accounting policies and the other explainatory notes forms an integral part of the financial statements of the Company for the year ended 31st March, 2012.

7. Prior Period Comparison

The Company has reclassified the published previous year figures to conform to the norms of the Revised Schedule VI. The adoption of the revised Schedule VI does not impact recognition and measurement principles followed for preparation of the financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of Balance Sheet.

Mar 31, 2011

I. Current Tax:

Current Tax is calculated as per the provisions of the Income tax Act, 1961.

II. Deferred Tax:

Deferred Tax is recognized on timing differences being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets, subject to the consideration of prudence are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on balance sheet date.

III. In view of judicial pronouncements and in accordance with advice of the Companys Tax Advisor, no provision has been made for the completed assessments, which are in appeal.

IV. MAT Credit:

MAT Credit entitlement is recognized only when the Company actually avails the MAT credit based on its annual tax computation.

s) Provisions, Contingent Liabilities and Contingent Assets

A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent Liabilities are not recognised but disclosed in notes to accounts. Contingent assets are neither recognised nor recorded in financial statements.

t) Government Grants

The Company accounts government grants relating to specific fixed assets as deferred income and recognises the same proportionately over the useful life of the asset.

u) Cash and Cash Equivalents

Cash and cash equivalents in the Balance Sheet comprise cash at bank,cheques on hand, cash in hand and short term investments with an original maturity of three months or less.

31.03.2011 31.03.2010 Rupees in Crores Rupees in Crores

2. Contingent liabilities not provided for in respect of :

a) Bills discounted with banks. 106.95 87.00

Since realized 47.85 26.48

b) Other moneys for which the Company is contingently liable for tax, excise, customs and other matters not accepted by the Company. 11.39 30.31

c) Claims against the Company not acknowledged as debts. 0.01 0.10

d) Corporate Guarantees given to bankers of associates & subsidiaries for which the Company 30.00 30.00 holds counter guarantees.

e) Corporate Guarantee given to others 2.28 2.28

f) Guarantees given by banks in favour of Govt. & others/ Letter of Credit opened against which 96.75 33.86 goods are not received

g) Uncalled liability on partly paid shares 4.48 -

3. Additional information pursuant to paragraphs 3, 4, 4A, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956

Notes :-

a) As the industrial licensing in respect of drugs and pharmaceuticals produced by the Company has been abolished under the Industrial Policy, the particulars of licensed capacity are not stated.

b) Installed capacity, being of a technical nature is not verified by the Auditors.

c) Production of basic drugs/intermediates includes 1459 tonnes (Previous year 1088 tonnes) used for captive consumption.

d) Production includes production under contract manufacturing.

e) Previous years figures are given in bracket.

4. a) Amount of long term loans repayable in the following 12 months aggregate to Rs. 72.20 crores (Previous year Rs. 41.18 crores). b) During the year the Company had raised and repaid Commercial Paper. The maximum outstanding amount during the year was Rs. 45.00 crores and the Closing balance at year end is Rs. Nil.

5. Provision for taxation includes provision for wealth tax of Rs.0.07 crore (Previous year Rs.0.05 crore).

6. In the opinion of the Board of Directors, all the current assets, loans & advances have value on realisation atleast of an amount equal to the amount at which they are stated in the Balance Sheet.

7. Bank balances :

a) Balances with scheduled banks in Schedule 8 include Rs.1.20 crore (Previous year Rs. 1.16 crore) in unpaid dividend account.

8. The disclosure of information related to Micro, Small and Medium Enterprises creditors is made on the basis of information of registration under the Micro, Small and Medium Enterprises Development Act 2006 given to the Company by the creditors. This information is relied upon by the auditors.

9. Managerial Remuneration :

Managerial Remuneration does not include Stock Option Compensation cost relating to Joint managing Director & Independent Directors of Rs.0.01 crore (previous year Rs. 0.04 crore) charged to Profit & Loss Account.

10. Unpaid dividend does not include any amount to be credited to Investor Education and Protection fund.

11. a) The Company has made provision for diminution in the value of Investments in shares of Ipca Traditional Remedies Pvt. Ltd. and Ipca Pharmaceuticals Inc. USA for Rs.2.96 crores and Rs. 7.00 crores respectively.

b) The diminution in the value of investments in shares of Tonira Pharma Ltd. determined on the basis of market price as on 31st March, 2011 is not considered permanent based on the intrinsic value of the company. Consequently no provision for diminution in the value of investments in said Tonira Pharma Ltd. is considered necessary.

12. Disclosure under Accounting Standard -29 "Provisions, Contingent Liabilities and Contingent Assets".

(Rupees in Crores) Particulars Opening Additions during Amounts paid / Closing Balance the year reversed Balance during the year

Provision for wage revision under negotiation 0.79 1.86 - 2.65

(Previous Year) (0.51) (0.28) - (0.79)

13. c) ESOS Commitment Deposit:

Amount received from employees/directors on grant of stock options pending exercise/allotment of shares is shown as share application money pending allotment.

Note : i) Employers contribution includes payments made by the Company directly to its past employees.

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

iii) The Companys Gratuity fund is managed by Life Insurance Corporation of India. The plan assets under the fund are deposited under approved securities.

14. Disclosure under Accounting Standard Ã 19 "Leases", issued by the Institute of Chartered Accountants of India:

The Company has taken various residential / godowns / office premises (including Furniture and Fittings if any) under leave and licence agreements for periods which generally range between 11 months to 3 years. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in the Profit and Loss Account under Rent.

15. a) The Company has entered into various derivatives transactions, which are not intended for trading or speculative purpose but to hedge the export receivable including future receivables and foreign currency loan interest rate risks.

b) The Company has continued its decision not to exercise the option available under amendment to AS 11 relating to "The effects of Changes in Foreign Exchange Rates" in respect of its Long Term Foreign Currency Monetary Items in respect of foreign currency loans for the acquisition of fixed assets.

d) The Company has an annual average exports of USD 224 Million of which the Company has partially hedged its receivables by the aforesaid options disclosed in para (a) above. The unhedged currency risk detailed in para (c) above has a natural hedge against the unhedged export receivables of USD 17.63 Million (Previous year USD 14.04 Million) as at 31st March,2011.

16. The entire operations of the Company relate to only one segment viz. pharmaceuticals. As such, there is no separate reportable segment under Accounting Standard - AS 17 on Segment Reporting.

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

Relationships:

A. Entities where control exists

Shareholders of Ipca Laboratories Ltd

Kaygee Investments Pvt.Ltd.

Chandurkar Investments Pvt.Ltd.

Subsidiaries

Laboratories Ipca Do Brasil Ltda, Brazil (Under liquidation)

Ipca Pharmaceuticals, Inc. USA

Ipca Laboratories U.K. Ltd. United Kingdom

Ipca Pharma (Australia) Pty Ltd. Australia

Ipca Pharma Nigeria Ltd.,Nigeria

National Druggists (Pty) Ltd.,South Africa

Ipca Pharmaceuticals (Shanghai) Ltd.

Ipca Pharmaceuticals Ltd. Mexico

Ipca Traditional Remedies Pvt. Ltd.

Step-down Subsidiaries

Ipca Pharma (NZ) Pty Ltd., New Zealand.

Joint Venture Company

Activa Pharmaceuticals (FZC), UAE. (Liquidated on 09.03.2010)

B. Key Management Personnel

Mr. Premchand Godha Managing Director

Mr. A.K.Jain Joint Managing Director

Mr. Pranay Godha Executive Director

C. Associates

Paschim Chemicals Pvt.Ltd.

Tonira Pharma Ltd.

Makers Laboratories Ltd.

D. Other Related Parties (Entities in which Directors or their relatives have significant influence)

Nipra Industries Pvt.Ltd.

Keymed

Oscar Industries

Mrs. Usha P. Godha

Prabhat Foundation

Vandhara Resorts Pvt.Ltd.

Loans and advances to subsidiary companies (Sr. No. i to iv) are without interest and there is no repayment schedule fixed. Loans and advances to subsidiary/associate (Sr. No. v to vii) are interest bearing loans subject to repayment within three years.

b) Investment by the loanee in the shares of the Company

None of the loanees have, per se , made investments in the shares of the Company.

18. Previous years figures have been regrouped and rearranged wherever necessary.

Mar 31, 2010

1. Amount of long term loans repayable in the following 12 months aggregate to Rs. 41.18 crores (Previous year Rs. 72.00 crores).

2, Provision for taxation includes provision for wealth tax of Rs. 0.05 crore (Previous year Rs,0.05 crore).

3. In the opinion of the Board of Directors, all the current assets, loans & advances have value on realisation atleast of an amount equal to the amount at which they are stated in the Balance Sheet.

4. Bank balances:

a) Balances with scheduled banks in Schedule 8 include Rs.1.16 crore (Previous year Rs. 1.05 crore) in unpaid dividend account.

b) Balances with non-scheduled banks in Schedule 8:

5. The disclosure of information related to Micro, Small and Medium Enterprises creditors is made on the basis of information of registration under the Micro, Small and Medium Enterprises Development Act 2006 given to the Company by the creditors. This information is relied upon by the auditors.

6. Unpaid dividend does not include any amount to be credited to Investor Education and Protection fund.

7. a) The Company has made provision for diminution in the value of Investments in shares of Mangalam Drugs & Organics Ltd. Of Rs.2.99 Crores.

b) The Company has made further provision of Rs. 0,09 crores towards diminution in the value of Investment in respect of its investments in Laboratories Ipca Do Brasil Ltda. (wholly owned subsidiary) on account of the unviability of the business in Brazil. The company will take steps to close down its subsidiary and liquidate its investments.

8. a) In terms of the Scheme of Buy-Back of the Equity Shares of the Company, the Company has upto the closure of the scheme bought back 2,56,219 equity shares of Rs.10 each from open market operations at an average price of Rs. 368.43.These shares have been extinguished and the paid up capital has been reduced accordingly by Rs. 0.26 crore. The cost of purchase in excess of the nominal value of the shares has been debited to General Reserve Account, The Company has also transferred an amount of Rs. 0.26 crore to the Capital Redemption Reserve by debit to the General Reserve as required by the provisions of the Companies Act.

b) The Company has reversed back the proposed dividend of Rs.0.01 crore on equity shares that were extinguished between the date of previous Balance Sheet and the record date for declaration of dividend,

9. Disclosure under Accounting Standard -29 "Provisions, Contingent Liabilities and Contingent Assets",

Note:- The Company has during the year, more specifically on 25.02.10, sub divided the face value of each equity share from Rs. 10 to Rs. 2 each and accordingly issued 5 equity shares of Rs. 2 each against each share of Rs, 10,On account of this sub division, the outstanding equity shares as at 31st March, 2010 is 12,52,27,655 including 15,08,750 equity shares issued on exercise of ESOPs by the employees. The earnings per share for the current year and the previous year is calculated on the face value of Rs. 2 each as required by AS-20, Earnings Per Share, of the Companies (Accounting Standards) Rules, 2006.

10. Interest in Joint Venture:

The Company has a Joint Venture Company in Middle East by name of Activa Pharmaceuticals (FZC), SAIF - Zone, Sharjah in which it has a control of 50%. In the standalone Balance Sheet of the Company, Joint-Venture interest is reported under Long term Investment at Cost. During the year, the said JV has been shut down and liquidated. The excess of Rs. 0.23 crore over the value of Investment has been included in Profit on Sale of Investments, The final accounts post liquidation has been received and necessary effects have been given, Proportionate share of the Company as on 31st March 2010 in the assets, liabilities, income, expenditure, contingent liability and capital commitments of the Joint Venture company is as follows:

11. a) If the compensation cost of shares issued under Employees Stock Option Scheme 2006 (ESOS) is determined in accordance with the fair value approach described in the Guidance Note, the Companys net profit for the year ended March 31, 2010 as reported would change to amounts indicated below:

12. Disclosure under Accounting Standard - 19 "Leases", issued by the Institute of Chartered Accountants of India:

The Company has taken various residential/godowns/office premises (including Furniture and Fittings if any) under leave and licence agreements for periods which generally range between 11 months to 3 years. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognised in the Profit and Loss Account under Rent.

13. a) The Company has entered into various derivatives transactions, which are not intended for trading or speculative purpose but to hedge the export receivable including future receivables and foreign currency loan interest rate risks.

d) The Company has an annual average exports of USD 171 Million of which the Company has partially hedged its receivables by the aforesaid options disclosed in para (a) above. The unhedged currency risk detailed in para (c) above has a natural hedge against the unhedged export receivables of USD 54.01 Million (Previous year 23.44 Million) as at 31st March, 2010.

14, The entire operations of the Company relate to only one segment, viz. pharmaceuticals. As such, there is no separate reportable segment under Accounting Standard - AS 17 on Segment Reporting.

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

16, Details of rounded off amounts

The financial statements are represented in Rupees crore. Those items which are not represented in the financial statement due to rounding off to the nearest Rs. crore are given below.

17. Previous years figures have been regrouped and rearranged wherever necessary.

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