Notes to Accounts of Mangalam Drugs and Organics Ltd.

Mar 31, 2018

Note:

Working capital facilities from State Bank of India. Indian Bank. Central Bank of India and Punjab and Maharashtra Co. op. Bank Ltd is secured by

a) First Pari Passu charge on the entire current assets of the company(both present & future).

b) Second Pari Passu charge on the entire fixed assets of the company(both present & future)

Note: 1 - 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, it 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: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period. Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.

The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximates the fair value because there is wide range of possible fair value measurements and the costs represents estimate of fair value within that range.

The Management considers that the carrying amount of financials assets and financial liabilities carried at amortised cost approximates their fair values.

NOTE : 2

Note: :Financial Risk Management

The Company’s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company’s risk management assessment and policies and processes are established to identify and analyze 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 Company’s activities.

A) 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 Company’s receivables from customers and investments in debt securities.

The carrying amount of following financial assets represents the maximum credit exposure:

a) Trade and Other Receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However credit risk with regards to trade receivable is almost negligible in case of its residential sale and lease rental business as the same is due to the fact that in case of its residential sell business it does not handover possession till entire outstanding is received. No impairment is observed on the carrying value of trade receivables.

b) Cash and Cash Equivalents

Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Board. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure as far as possible that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed condition, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of surplus funds, bank overdrafts, bank loans, debentures and inter-corporate loans.

The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding.

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 commodity prices and the market value of its investments.

Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt obligations with floating interest rates.

Note: 3 - Capital management

The company’s objectives when managing capital are to:

- Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

The Company monitors capital on the basis of the carrying amount of debt less cash and cash equivalents as presented on the face of the financial statements. The Company’s objective for capital management is to maintain an optimum overall financial structure.

Consistent with others in the industry, the company monitors capital on the basis of the following gearing ratio:

Note: 4 - Earnings per Share (Basic and Diluted)

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the parent (after adjusting for interest on the convertible preference shares) by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

Note: 5 - First time adoption of IND AS

Explanation to transition to Ind AS

Ind AS 101 -“First-time Adoption of Indian Accounting Standards” requires that all Ind AS and interpretations that are issued and effective for the first Ind AS financial statements which is for the year ended March 31, 2018 for the Company, be applied retrospectively and consistently for all financial years presented, except the Company has availed certain exemptions and complied with the mandatory exceptions provided in Ind AS 101, as described below. The Company has recognised all assets and liabilities whose recognition is required by Ind AS and has not recognised items of assets or liabilities which are not permitted by Ind AS, reclassified items from previous GAAP to Ind AS as required under Ind AS and applied Ind AS in measurement of recognised assets and liabilities.

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

Derecognition of financial assets and financial liabilities

The Company has applied the de-recognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after the transition date.

Classification and measurement of financial assets

The Company has assessed conditions for classification of the financial assets on the basis of the facts and circumstances that were exist on the date of transition to Ind AS.

Deemed cost of property. plant and equipment and intangible assets

On transition to Ind AS, the Company has elected to continue with the carrying value of all assets recognised as at April 01, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment and intangible assets.

Designation of previously recognised financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances as at the date of transition to Ind AS. The Company has elected to apply this exemption for its investments in certain equity instruments.

Fair value measurement of financial assets and financial liabilities at initial recognition

The Company has applied the requirements in paragraph B5.1.2A (b) of Ind AS 109 prospectively to transactions entered into on or after the date of transition to Ind AS. This exemption has been availed by the Company.

Notes on reconciliations between previous GAAP and Ind AS

a) Investments at fair value through profit or loss

Under Indian GAAP, the company recognised current investments in quoted equity shares at lower of cost or fair market and non-current investments at cost less provisions for diminution in the fair value of investments, if any. Under Ind AS, gains on investments have been measured at fair value through profit or loss and gains or losses are recognised in the statement of profit and loss.

b) Employee benefits

Under previous GAAP, actuarial gains and losses were recognised in statement of profit and loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of net defined benefit liability / asset which is recognised in other comprehensive income in the respective periods.

c) Effect of transition to Ind AS on Standalone Cash Flow Statement for the year ended March 31, 2017

Net increase in cash and cash equivalents represents movement in cash credit facilities considered as a component of cash and cash equivalents under Ind AS which as per previous GAAP, was considered as financing activity. Other Ind AS adjustments are either non cash adjustments or are regrouping among the cash flows from operating, investing and financing activities and has no impact on the net cash flow for the year ended 31st March, 2017 as compared with the previous GAAP.

Note: 6

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.

Note: 7 - Segment Information

Segment revenue

Sales between segments are carried out at arm’s length and are eliminated on consolidation. The segment revenue is measured in the same way as in the statement of profit or loss.

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Mar 31, 2016

Note No.1.

The balances in the accounts of Debtors and Creditors are as appeared in the books of account and subject to confirmation.

Note No.2.

In the opinion of the Director’s Current Assets, Loans and Advances, if realized in ordinary course of the business have on realization at least the value at which they are stated in the Balance Sheet.

Note No.3.

Number of employees in respect of remuneration of '' 60,00,000/-P. A. or more if employed throughout the financial year (or '' 5,00,000/-p.m. if employed for the part of the period) is NIL.

Note No.4.

There are no Micro and Small Scale Business Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2016.This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

Note No.5. Segment Information.

1. Company’s operations are predominantly related to the manufacture of bulk drugs, as such there is only one primary reportable segment. Secondary reportable segments are identified taking into account the geographical markets available to the products.

Note No. 6. Employee Benefits:-

Defined benefit plan as per actuarial valuation on March 31, 2016

Note No. 7.

Previous year figures have been regrouped/restated wherever necessary to confirm with this periods classification.

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Mar 31, 2015

1. Terms / Right attached to equity shares

The Company has one class of issued shares referred to as equity shares having a par value Rs 10/-each holder of equity shares is entitled to one vote per share. The dividend proposed by the board of directors, If any,is subjected to the approval of shareholders in Annual General Meeting.In the event of liqauidation of the Company the holder of the equity shares will be entitled to receive remaining assets of the Company after settlement of all preferential amount.

The distribution will be in proportion to the number of equity shares held by the equity shareholders.

2. CONTINGENT LIABILITIES:

PARTICULARS CURRENT PREVIOUS YEAR YEAR Amount in Rs Amount in Rs.

A) Performance Guarantees/ Bonds

(i) Guarantee executed in favor of Assistant Collector of Customs 17,68,867 -

(ii) Guarantee executed in favor of Export Parties. 68,300 68,300

(iii) Guarantee executed in favor of Central Excise 8,49,750 14,87,063

B) Others

(iv) Guarantee given to GSPC Gas 72,58,388 75,12,591 Co Ltd

(vi) Guarantee given to GPCB 2,00,000 7, 00,000

3. The balances in the accounts of Debtors and Creditors are as appeared in the books of account and subject to confirmation.

4. In the opinion of the Director's Current Assets, Loans and Advances, if realised in ordinary course of the business have on realisation at least the value at which they are stated in the Balance Sheet.

5. Number of employees in respect of remuneration of Rs. 60,00,000/-P. A. or more if employed throughout the financial year (or Rs. 5,00,000/- if employed for the part of the period) is NIL.

6. There are no Micro and Small Scale Business Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2015.This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

Related party disclosures as required by Accounting Standard - AS 18 "Related parties disclosures" issued by Institute of Chartered Accountants of India are given below:

A) Associate Companies and others.

* Raga Organics Private Ltd.

* Mangalam Laboratories Pvt. Ltd.

B) Key Management Personnel

* Shri Govardhan M. Dhoot

* Shri Subhash C.Khattar

* Shri Rajendraprasad K. Mimani (Resigned as Director w.e.f 02.02.2015)

* Smt Meenal Sukhani.(Appointed as Director w.e.f 21.10.2014)

* Shri Brijmohan M.Dhoot(Appointed as Director w.e.f 02.05.2015)

7. Previous year figures have been regrouped/restated wherever necessary to confirm with this periods classification.

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Mar 31, 2014

Note No.1. CONTINGENT LIABILITIES:

PARTICULARS CURRENT PREVIOUS YEAR YEAR Amount in Rs Amount in Rs.

A) Performance Guarantees/ Bonds

(i) Guarantee executed in favor of Assistant Collector of Customs - 19,85,000

(ii) Guarantee executed in favor of Export Parties. 68,300 68300

(iii) Guarantee executed in favor of Central Excise 14,87,063 15,21,053

B) Others

(iv) Guarantee given to GSPC Gas Co Ltd 75,12,591 67,28,843

(vi) Guarantee given to GPCB 7, 00,000 8,00,000

Note No.2.

The balances in the accounts of Debtors and Creditors are as appeared in the books of account and subject to confirmation.

Note No.3

In the opinion of the Director''s Current Assets, Loans and Advances, if realised in ordinary course of the business have on realisation at least the value at which they are stated in the Balance Sheet.

Note No.4.

Number of employees in respect of remuneration of Rs. 60,00,000/-P. A. or more if employed throughout the financial year (or Rs. 5,00,000/- if employed for the part of the period) is NIL.

Note No.5.

There are no Micro and Small Scale Business Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2014.This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

Note No.6. Segment Information.

1. Company''s operations are predominantly related to the manufacture of bulk drugs, as such there is only one primary reportable segment. Secondary reportable segments are identified taking into account the geographical markets available to the products.

Secondary Segments – Geographical Segments

Certain assets of the company are used by different segments for different portion of the accounting period; hence the value of the assets cannot be allocated to the segments.

Note No. 7.

Related party disclosures as required by Accounting Standard – AS 18 "Related parties disclosures" issued by Institute of Chartered Accountants of India are given below:

A) Associate Companies and others.

Raga Organics Private Ltd. Mangalam Laboratories Pvt. Ltd.

B) Key Management Personnel

Shri Govardhan M. Dhoot

Shri Subhash C.Khattar

Shri Rajendraprasad K. Mimani

C) Relatives of Key Management Personnel

Shri Brijmohan M.Dhoot

Note No. 8.

Previous year figures have been regrouped/restated wherever necessary to confirm with this periods classification.

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Mar 31, 2013

Note No. 1

The balances in the accounts of Debtors and Creditors are as appeared in the books of account and subject to confrmation.

Note No. 2

In the opinion of the Director''s Current Assets, Loans and Advances, if realised in ordinary course of the business have on realisation at least the value at which they are stated in the Balance Sheet.

Note No. 3

Number of employees in respect of remuneration of Rs. 60,00,000/- p.a. or more if employed throughout the fnancial year (or Rs. 5,00,000/- if employed for the part of the period) is NIL.

Note No. 4

There are no Micro and Small Scale Business Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2013. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identifed on the basis of information available with the Company.

Note No. 5 SEGMENT INFORMATION

1. Company''s operations are predominantly related to the manufacture of bulk drugs, as such there is only one primary reportable segment. Secondary reportable segments are identifed taking into account the geographical markets available to the products.

Secondary Segments – Geographical Segments

Certain assets of the company are used by different segments for different portion of the accounting period; hence the value of the assets cannot be allocated to the segments.

Note No. 6

Related party disclosures as required by Accounting Standard – AS 18 "Related parties disclosures" issued by Institute of Chartered Accountants of India are given below:

A) Associate Companies and others. Raga Organics Private Ltd. Mangalam Laboratories Pvt. Ltd.

B) Key Management Personnel Shri Govardhan M. Dhoot Shri Subhash C. Khattar

Shri Rajendraprasad K. Mimani

C) Relatives of Key Management Personnel Shri Brijmohan M. Dhoot

Note No. 7

Previous year fgures have been regrouped/restated wherever necessary to confrm with this periods classifcation.

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Mar 31, 2012

1. CONTINGENT LIABILITIES:



PARTICULARS CURRENT PREVIOUS YEAR YEAR Amount in Rs. Amount in Rs.

A) Performance Guarantees/ Bonds

(i) Guarantee executed in favor of Assistant Collector of Customs 19,85,000 19,85,000

(ii) Guarantee executed in favor of Export Parties. 68,300 -

(iii) Guarantee executed in favor of Central Excise 8, 83,740 8, 83,740

B) Others

(iv) Guarantee given to GSPC Gas Co Ltd_ 66,01,729 45,76,240

(v) Guarantee given to Corporate - 56,19,34,000

(vi) Guarantee given to GPCB 8,00,000 -

(vii) Guarantee given to Sale Tax (Gujarat) 2,70,869 -

2. The balances in the accounts of Debtors and Creditors are as appeared in the books of account and subject to confirmation.

3. SECURED LOANS

I) Term loan from State Bank of India, IDBI Bank and Punjab and Maharashtra Co. Op. Bank Ltd bank are secured by the way of;

- First Pari-passu charge on entire fixed assets of the company.

- Second Pari-passu charge on entire current assets of the company.

II) Working Capital Facilities from State Bank of India, IDBI Bank Ltd and Punjab and Maharashtra Co-Op. Bank Ltd. is secured by

- First charge on the entire current assets of the company on pari-passu basis

- Second charge on the entire fixed assets of the company on pari-Passu basis.

4. In the opinion of the Director's Current Assets, Loans and Advances, if realized in ordinary course of the business have on realisation at least the value at which they are stated in the Balance Sheet. *

5. Number of employees in respect of remuneration of Rs. 24,00,000/-P. A. or more if employed throughout the financial year (or Rs. 2,00,000/- if employed for the part of the period) is NIL.

6. There are no Micro and Small Scale Business Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31,2012. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company

7. Related party disclosures as required by Accounting Standard - AS 18 " Related parties disclosures" issued by Institute of Chartered Accountants of India are given below :

A) Associate Companies and others Raga Organics Private Ltd.

Mangalam Laboratories Pvt. Ltd.

B) Key Management Personnel Shri Govardhan M. Dhoot Shri Subhash C.Khattar Shri Rajendraprasad K. Mimani

C) Relatives of Key Management Personnel Shri Brijmohan M. Dhoot

c) Terms / Right attached to equity shares

The Company has one class of issued shares referred to as equity shares having a par value Rs 10/-each holder of equity shares is entitled to one vote per share. The dividend proposed by the board of directors, If any, is subjected to the approval of shareholders in Annual General Meeting. In the event of liqauidation of the Company the holder of the equity shares will be entitled to receive remaining assets of the Company after settlement of all preferential amount The distribution will be in proportion to the number of equity shares held by the equity shareholders.

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Mar 31, 2010

1. CONTINGENT LIABILITIES:

PARTICULARS CURRENTYEAR PREVIOUS YEAR

Amount in Rs Amount in Rs.

A) Performance Guarantees/ Bonds

(i). Guarantee executed in favor of Assistant Collector of 20,53,300 33,04,936 Customs

(ii) Guarantee executed in favor of Export Parties. 6,26,824 7,41,500

(iii) Guarantee executed in favor of Central Excise 8,83,740 8,83,740

B) Others

(iv) Guarantee given to GSPC Gas Co Ltd 41,07,513 41,07,513

(v) Guarantee given to Corporate 56,19,34,000 56,19,34,000

2. The balances in the accounts of Debtors and Creditors are as appeared in the books of account and subject to confirmation.

3. SECURED LOANS

i) Term loan from State Bank of India and IDBI Bank are secured by the way of;

a) First Pari Passu charge on the entire fixed assets of the company.

b) Second Pari Passu charge on the entire current assets of the company.

ii) Working Capital Facilities from State Bank of India and l.D.B.I.Bank Ltd. is secured by

a) First hypothecation charge on the entire current assets of the company on pari passu basis.

b) Second charge on the entire fixed assets of the company on Pari Passu basis.

4. In the opinion of the Directors Current Assets, Loans and Advances, if realised in ordinary course of the business have on realisation at least the value at which they are stated in the Balance Sheet.

5. Number of employees in respect of remuneration of Rs. 24,00,000/-P. A. or more if employed throughout the financial year (or Rs. 2,00,000/- if employed for the part of the period) is NIL.

6. Secured Loans include Rs. 1,90,50,000/-repayable within one year.

7. There are no Micro and Small Scale Business Enterprises,to whom the Company owes dues. which are outstanding for more than 45 days as at March 31,2010.This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act,2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

8. Related party disclosures as required by Accounting Standard - AS 18 " Related parties disclosures" issued by Institute of Chartered Accountants of India are given below :

A) Associate Companies and others *

- Raga Organics Private Ltd.

- Mangalam Laboratories Pvt. Ltd.

B) Key Management Personnel

- Shri Govardhan M. Dhoot

- Shri Subhash C.Khattar

- Shri Rajendraprasad K. Mimani

C) Relatives of Key Management Personnel

- Shri Brijmohan M. Dhoot

9. Previous year figures have been regrouped/restated wherever necessary to confirm with this periods classification.