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Notes to Accounts of Jenburkt Pharmaceuticals Ltd.

Mar 31, 2019

A. CORPORATE INFORMATION

Jenburkt Pharmaceuticals Limited (âthe Companyâ) is a listed entity incorporated in India and is listed on BSE Limited.

The registered office of the company is situated at Nirmala Apartments, 93, Jayprakash Road, Andheri (W), Mumbai -400 058.

The Company is in the business of manufacturing, producing, developing and marketing a wide range of branded Pharmaceuticals and health care products.

The Financial Statements are approved for issue by the Board of Directors of the Company on 28* May, 2019

B. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The preparation of the Companyâs financial statements requires management to make judgement, estimates and assumptions that affect the reported amount of revenue, expenses, assets and liabilities and the accompanying disclosures. 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) Decommissioning Liabilities

The liability for decommissioning costs are recognized when the Company has obligation to perform site restoration activity. The recognition and measurement of decommissioning provisions involves the use of estimates and assumptions. These include; the timing of abandonment of well and related facilities which would depend upon the ultimate life of the field, expected utilization of assets by other fields, the scope of abandonment activity and pre-tax rate applied for discounting.

b) Depreciation / amortisation and useful lives of property plant and equipment / intangible assets

Property, plant and equipment / intangible assets are depreciated / amortised over their estimated useful lives, after taking into account estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation / amortisation to be recorded during any reporting period. The useful lives and residual values are based on the Companyâs historical experience with similar assets and take into account anticipated technological changes. The depreciation / amortisation for future periods is revised if there are significant changes from previous estimates.

c) Recoverability of trade receivable

Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of nonpayment.

d) Provisions

Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.

e) Impairment of non-financial assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or Cash Generating Units (CGUâs) fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or a groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if no such transactions can be identified, an appropriate valuation model is used.

f) Impairment of financial assets

The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Companyâs past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

1. Corporate Social Responsibility

CSR amount required to be spent as per Section 135 of the Companies Act, 2013 read with Schedule VII thereof by the Company during the year is Rs.41.13 lacs (Previous Year Rs.34.79 lacs).

Actual Expenditure towards CSR during the year is Rs.25 lacs (Previous Year Rs.12 lacs).

2. Employee Benefits

As per Indian Accounting Standard 19 âEmployee benefitsâ, the disclosures as defined are given below: Defined Contribution Plans

Contribution to Defined Contribution Plans, recognised as expense for the year is as under

Defined Benefit Plans

Reconciliation of opening and closing balances of Defined Benefit Obligation

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

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

Furthermore, in presenting the above sensitivity analysis, the present value of the projected benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same method as applied in calculating the projected benefit obligation as recognised in the balance sheet.

= Gratuity is payable as per company''s scheme as detailed in the report.

= Actuarial gains/losses are recognized in the period of occurrence under Other Comprehensive Income (OCI). All above reported figures of OCI are gross of taxation.

= Opening liability, assets and assumptions are taken from company''s financials & Previous Actuarial Report.

= Salary escalation & attrition rate are considered as advised by the company; they appear to be in line with the industry practice considering promotion and demand & supply of the employees.

= Maturity Analysis of Benefit Payments is undiscounted cashflows considering future salary, attrition & death in respective year for members as mentioned above.

= Average Expected Future Service represents Estimated Term of Post - Employment Benefit Obligation.

= Value of asset provided by the client is considered as fair value of plan asset for the period of reporting as same is not evaluated by us. Qualitative Disclosures

Para 139 (a) Characteristics of defined benefit plan

The Company has a defined benefit gratuity plan in India (funded). The companyâs defined benefit gratuity plan is a final salary plan for employees, which requires contributions to be made to a separately administered fund.

The fund is managed by a trust which is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy.

Para 139 (b) Risks associated with defined benefit plan

Gratuity is a defined benefit plan and company is exposed to the Following Risks:

Interest Rate Risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.

Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan''s liability.

Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.

Mortality Risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance company and a default will wipe out all the assets. Although probability of this is very less as insurance companies have to follow regulatory guidelines.

Para 139 (c) Characteristics of defined benefit plans

During the year, there were no plan amendments, curtailments and settlements.

Para 147 (a)

A separate trust fund is created to manage the Gratuity plan and the contributions towards the trust fund is done as guided by rule 103 of Income Tax Rules, 1962.

2. Capital Management

The Companyâs objectives when managing capital are to maintain its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to ensure sufficient resources are available to meet day to day operating requirements. The capital structure of the Company consists of equity attributable to equity holders, comprising share capital, reserves and retained earnings.

The Companyâs Board of Directors takes full responsibility for managing the Companyâs capital and does so through board meetings, review of financial information, and regular communication with Officers and Senior Management.

The Company expects its current capital resources will be sufficient to carry out its plans and operations through its current operating year. The Company is not subject to externally imposed capital requirements and there has been no change in the overall capital management as at 31^st March, 2019.

3. Financial Instruments

Valuation

a) All financial instruments are initially recognized and subsequently re-measured at fair value as described below:

b) The fair value of investment in quoted Equity Shares, Debentures, Government Securities and Mutual Funds is measured at quoted price or NAV.

c) The fair value of the remaining financial instruments are determined using discounted cash flow analysis. Or the fair values of these financial instruments are estimated to approximate their carrying values due to their immediate or short-term nature.

d) All foreign currency denominated assets and liabilities are translated using exchange rate at reporting date.

4. Financial Risk Management:

The Companyâs activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Companyâs risk management assessment and policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Companyâs activities.

Credit risk:

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companyâs receivables from customers, loans and investments. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of counterparty to which the Company grants credit terms in the normal course of business.

Investments:

The Company limits its exposure to credit risk by generally investing in liquid securities such as bank fixed deposits, Mutual Funds, etc. The Company does not expect any losses from such investments and does not have any significant concentration of exposures to specific industry sectors or specific country risks.

Trade receivables:

The Company has used expected credit loss (ECL) model for assessing the impairment loss. For the purpose, the Company uses a provision matrix to compute the expected credit loss amount. The provision matrix takes into account external and internal risk factors and historical data of credit losses from various customers.

Liquidity risk:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Companyâs reputation. The Company has unutilised working capital loans from Bank, apart from that the Company maintains sufficient cash and other Bank Balances, hence it does not face any significant liquidity risk. Most of the surplus funds are kept is bank fixed deposits on long-term basis and the companyâs borrowings are in foreign currency under bill discounting at very low interest rate

Market risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchange rates and commodity prices) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and long-term debt. The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of its investments. Thus, the Companyâs exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.

Foreign exchange risk

The Companyâs foreign exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily in US Dollars, Eros,). As a result, if the value of the Indian rupee appreciates relative to these foreign currencies, the Companyâs revenues and expenses measured in Indian rupees may decrease or increase and vice-versa. The exchange rates between the Indian rupee and these foreign currencies have changed substantially in recent periods and may continue to fluctuate substantially in the future. Consequently, the Company uses non-derivative financial instruments such as foreign currency financial liabilities, to mitigate the risk of changes in foreign currency exchange rates in respect of its Debtors and other recognized assets and liabilities.

b) Sensitivity

For the years ended March 31^st, 2019 & March 31^st, 2018 every 5% strengthening in the exchange rate between the Indian rupee and the respective currencies for the above mentioned financial assets/liabilities would increase the Companyâs loss and decrease the Companyâs equity by approximately Rs.4.26 & Rs.6.12 lacs respectively. A 5% weakening of the Indian rupee and the respective currencies would lead to an equal but opposite effect.

In managementâs opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.

Interest rate risk

The company rarely utilizes overdraft/ cash credit facilities which are at floating rate of interest, hence it is not exposed to high interest rate risk.

Commodity rate risk

Exposure to market risk with respect to commodity prices primarily arises from the Companyâs purchases and sales of active pharmaceutical ingredients, including the raw material components for such active pharmaceutical ingredients. These are commodity products, whose prices may fluctuate over short periods of time. Commodity price risk exposure is evaluated and managed through operating procedures.

Few of the products of the company come under National List of Essential Medicines (NLEM). The company follows the procedure laid down by the implementing authority i.e. National Pharmaceutical Pricing Authority (NPPA) with regards to NLEM products.

Going Concern:

The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realization of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

5. Events after the reporting period

There are no events after the balance sheet date that requires disclosures.

6. Approval of Financial Statements

The financial statements were approved for issue by the board of directors on 28^th May, 2019.

Mar 31, 2018

previous GAAP carrying amount at the date of transition to In

AS.

5 Land is taken on Lease for a period of 99 years from GIDC in June 1997. Unexpired lease period is more than 78 years.

6 Vehicle is taken on Finance lease (Carrying amount ''22.43 lac) against hypothecation of the said Vehicle

7. Factory Land & Building, Plant & Machinery are mortgaged / hypothecated to Bank of Baroda against working capital in fund and non-fund based facilities availed by the company.

8 Refer note B.2 (b)

Foot notes:

1 Building includes ''1000/- as on March 31, 2018 towards cost of shares in a Co-operative Housing Society.(''1000/- as on March 31, 2017), C1000/- as on April 1,2016)

2. Office Building includes ''32.68 lac as carrying amount as on March 31, 2018 towards Renovation Expense (As on March, 31, 2017: ''36.51 lac), (As on April 1, 2016: ''37.89 lac)

3. The aggregate amortization has been included under depreciation and amortization expense in the statement of Profit & Loss.

4. The Company has elected to measure all its tangible assets at the

Nature and Purpose of each reserve

1 Capital Redemption Reserve: The Company has recognized capital redemption reserve on buyback of equity shares from its retained earnings. The amount in capital redemption reserve is equal to nominal amount of equity shares bought back.

2 GeneralReserve:ThereservearisesontransferofportionofthenetprofitpursuanttotheearlierprovisionsofCompaniesAct1956.Mandatorytransfertogeneralreserve isnotrequiredundertheCompaniesAct2013.

3. OtherComprehensiveIncome:TheCompanyhaselectedtorecognisechangesinfairvalueofcertaininvestmentsinequityinstrumentsinothercomprehensiveincome. Alsotheacturialgain/lossonEmployeeDefinedBenefitplans(Gratuity&LeaveEncashment)isrecognisedinothercomprehensiveincome.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

The Expected Rate of Return on Plan Assets is determined considering several applicable factors, mainly the composition of Plan Assets held, assessed risks, historical results of return on Plan Assets and the Companyâs policy for Plan Assets Management.

The expected contributions for Defined Benefit Plan for the next financial year will be in line with FY 2016-17.

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

Investment risk The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.

Interest risk Decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan debt investments Longevity risk The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.

Salary risk The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.

1. Capital Management

2. Financial Instruments

Valuation

a) All financial instruments are initially recognized and subsequently re-measured at fair value as described below:

b) The fair value of investment in quoted Equity Shares, Debentures, Government Securities and Mutual Funds is measured at quoted price or NAV.

d) All foreign currency denominated assets and liabilities are translated using exchange rate at reporting date.

50. Financial Risk Management:

Credit risk:

Investments:

Trade receivables:

Liquidity risk:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Companyâs reputation. The Company has unutilized working capital loans from Bank, apart from that the Company maintains sufficient cash and other Bank Balances, hence it does not face any significant liquidity risk. Most of the surplus funds are kept is bank fixed deposits on long-term basis and the companyâs borrowings are in foreign currency under bill discounting at very low interest rate

Market risk

Foreign exchange risk

b) Sensitivity

Forth years ended March 31, 2018, March 31, 2017 and April 01, 2016, every 5% strengthening in the exchange rate between the Indian rupee and the respective currencies for the above mentioned financial assets/liabilities would increase the Companyâs loss and decrease the Companyâs equity by approximately Rs,. 6.12 lac, Rs,.3.40 lac and Rs,.5.19 lac respectively. A 5% weakening of the Indian rupee and the respective currencies would lead to an equal but opposite effect.

Interest rate risk

The company rarely utilizes overdraft/ cash credit facilities which are at floating rate of interest, hence it is not exposed to high interest rate risk.

Commodity rate risk

Going Concern:

3. Events after the reporting period

There are no events after the balance sheet date that requires disclosures.

4. Approval of Financial Statements

The financial statements were approved for issue by the board of directors on 29^th May 2018.

Mar 31, 2015

Note 1. CONTIGENT LIABILITIES NOT PROVIDED IN THE ACCOUNTS

i. Bank Guarantee in respect of Government Supplies 2.44 0.00

Note 2. Cash and cash equivalent:

Cash and Cash Equivalents for the purpose of cash flow statement comprise cash on hand and cash at bank including fixed deposit with original maturity period of three months or less and short term highly liquid investments with an original maturity of three months or less.

Note 3. Previous year's figures have been regrouped and rearranged wherever necessary to make them comparable with current year's figures.

Mar 31, 2014

Not Available.

Mar 31, 2012

A. Defined Benefit Plans:

Gratuity and Leave Encashment for Employees at Head Office (Mumbai) and Gratuity for Employees at Plant (Sihor)

The company has made an arrangement with LIC of India in respect of the above liabilities payable to employees at the time of their retirement or otherwise. The present value of obligation is determined on Actuarial Valuation carried out by an independent certified Actuary by using the Proj ect Unit Credit Method (PUCM). In the year 2008- 09, the AS-15 had become mandatory for the Company, accordingly in following AS-15, the Company had recognized liability in respect of Gratuity and Leave Encashment (including past liabilities) based on Actuarial Valuation carried out by an independent Actuary. In the year 2009-10 and 2010-11, liabilities in respect of above two payments were recognized in accounts based on value determined by LIC of India. However, for the year 2011- 12, liabilities in respect of above payments are recognized in the accounts based on Actuarial Valuation carried out by independent Actuary. Since the parameters adopted while determining the liabilities by LIC of India for the year 2010-11 are not comparable with the parameters adopted by the Actuary for the year 2011-12, comparative figures for the year 2010-11 are not provided.

Leave Encashment for employees at Plant:

Provision for Leave Encashment payable to employees (at plant) at the time of their retirement or otherwise is estimated based on present salary drawn by the employees as on the date of Balance Sheet and accordingly provisions are made in the accounts. Provision for the current year is Rs 1,23,989/- (Rs 3,44,828/- for the F.Y. 31st March, 2011).

Mar 31, 2011

1.The liability for excise duty on finished goods lying in stock at the close of the year estimated at Rs. 6.25 lacs (as at 31st March 2010 Rs. 3.15 lacs) has not been provided for in the Accounts and hence not included in the valuation of inventory of such products. However the said liability, if accounted, would have no impact on profit of the year.

2.Micro, Small and Medium Enterprises under the micro, Small and Medium Enterprises Development Act, 2006, have been determined, based on the information available with the company and the required disclosures are given below:

3. Expenditure on Research & Development

The Revenue & Capital Expenditure incurred during the year are eligible for weighted deduction under section 35(2AB) of the Income Tax Act, 1961.

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

A. Particulars of Installed Capacity and Production:

Notes:

-Licensed capacities not stated in view of abolition of industrial licensing for all of the above class of goods vide Notification No. F.NO.10(11)/92-LP dated 25th October, 1994, issued by Government of India. -The installed Capacities of productions have been computed on the basis of workers working for 312 days in a year on a single shift. -The installed capacity is as certified by the management and not verified by the auditors, this being a technical matter. -Production of pharmaceutical preparation includes production of physician samples.

Note: The closing stock stated above is after adjustments on account of free goods, in-transit breakages and obsolete/date-expired goods.

5.Related party disclosure:

The related parties are as under

a.Key Management Personnel:

1. Shri Uttam N. Bhuta - Chairman and Managing Director 2. Shri Ashish U. Bhuta - Whole Time Director

b. Entities over which Key Management Personnel exercise significant influence: 1. Bhuta Holdings Pvt. Ltd.

6. Contingent Liabilities:

Foreign bills discounted Rs.76.33 lacs.

In accordance with ÃAccounting Standards 22Ã the Company has recognised the deferred Tax Liability of the Current Year amounting to Rs. 45.42 lacs and deferred tax Asset of Rs. 1.97 lacs which has been recognized on net basis on Profit & Loss Account.

7. Earnings per Share:

The company has reported basic earnings per share of Rs. 12.94 in accordance with AS-20, ÃEarnings per ShareÃ. The basic earning per equity share has been computed by dividing the profit after tax by number of equity shares.

8. In the opinion of the Board of Directors, all the Current Assets, Loans and Advances have value on realisation at least of an amount equal to the amount at which they are stated in the Balance Sheet.

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

Mar 31, 2010

1. The liability for excise duty on finished goods lying in stock at the close of the year estimated at Rs.3.15 lacs (as at 31st March 2009 Rs. 6.99 lacs) has not been provided for in the Accounts and hence not included in the valuation of inventory of such products. However, the said liability, if accounted, would have no impact on profit forthe year.

2. Related party disclosure: As per accounting standard AS-18 issued by the Institute of Chartered Accountants of India: Promoters: 1 .Shri Uttam N.Bhuta 2. Bhuta Holdings Pvt. Ltd. Enterprises under common control of promoters: Bhuta Holdings Pvt. Ltd.

Key management personnel: I.ShriUttamN.Bhuta 2.ShriAshishU.Bhuta.

The companys related party balances and transactions are as follows:

i. Shri Uttam N.Bhuta, chairman and managing director-remuneration paid Rs.23.76 lacs and dividend paid Rs. 5.23 lacs.

ii. Ashish U.Bhuta, whole time director (son of Shri Uttam N. Bhuta, CMD)- remuneration paid Rs.28.22 lacs and dividend paid Rs. 3.29 lacs. iii. Bhuta Holdings Pvt. Ltd-Rent paid Rs.24 lacs, and Total Security Deposit Rs.45 lacs and Dividend paid Rs. 9.36 lacs.

3. Taxation:Tax expenses comprise of current and differed taxes. Current income tax are measured at the amount expected to be paid to the tax authorities in accordance with the indian income tax act.

4. Contingent liabilities: Foreign bills discounted Rs.28.85 lacs.

5. Earnings per share:

The company has reported basic earnings per share of Rs. 8.13 in accordance with AS-20, "Earnings Per Share". The basic earning per equity share has been computed by dividing the profit aftertax by number of equity shares.

6. In the opinion of the board of directors, all the current assets, loans and advances have value on realisation at least of an amount equal to the amount at which they are stated in the balance sheet.

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

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