Mar 31, 2023
C Nature and purpose of reserves:
The Capital Reserve was created as per the requirements of earlier provision of the Companies Act, 1956. Such reserve is not available for distribution to the shareholders.
The Company has redeemed 1,350,000 7% Redeemable Cumulative Preference Shares of H 100/- each face value at par out of profits of the Company on various dates. Accordingly, a sum equal to the nominal amount of the preference shares i.e. H 135 Million (including H 50 Million pertaining to current year), out of the profits, has been transferred to Capital redemption reserve, as and when Preference Shares were redeemed.
During the current year, the Company bought back and accounted buy back of 6,474,276 equity shares. As per Companies Act, 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. Accordingly, H 6.47 Million has been transferred from Retained Earnings to Capital Redemption Reserve. The reserve is utilised in accordance with the provisions of Section 69 of the Companies Act, 2013.
Securities premium comprises of the premium on issue of shares. The reserve can be utilised in accordance with the specific provision of the Companies Act, 2013.
The Company has transferred a portion of the net profit before declaring dividend to general reserve pursuant to the earlier provisions of the Companies Act, 1956. Transfer to general reserve is not mandatorily required under the Companies Act, 2013.
Retained earnings are the profits earned till date, less any transfers to other reserves and dividends distributed.
The Company has only one class of equity shares having a face value of H 1/- per share. All the equity shares rank pari passu in all respect. Every holder of equity shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote. The equity share holders are entitled to dividend, if declared by the shareholders in an Annual General Meeting, in proportion to the number of equity shares held by the shareholders. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
c. Terms/rights attached to Preference Shares
The Companyâs preference shares carry dividend at the rate of 7% per annum subject to approval of the shareholders at an Annual General Meeting. The holder of the preference shares is entitled to one vote per share only on resolutions placed before the Company which directly affect the rights attached to the preference shares. In the event of liquidation of the Company before redemption of the preference shares, the holder of the preference shares will have priority over equity shares in the payment of dividend and repayment of capital. 7% redeemable preference shares issued by the Company have been classified as a financial liability.
d. The Company has redeemed all 7% Redeemable cumulative preference shares of H 100/- each at par on various dates.
e. The Company has issued on 20 January 2023, 50,324,324 Equity Shares of H 1/- each face value pursuant to conversion of Convertible Warrants on preferential issue basis. The Company has issued and allotted, 1,000,000 Equity Shares to Mr. Mark Saldanha and 49,324,324 Equity Shares to OrbiMed Asia IV Mauritius FVCI Limited at a price of H 74.00 per Equity Share pursuant to conversion of convertible warrants issued on preferential basis on receipt of the balance 75% of the issue price. The Company had received 25% of the issue price at the time of issue of convertible warrants. The Company has raised H 3,724 Million from the above preferential issue.
f. The Company has not issued bonus shares during the period of five years immediately preceding the reporting date.
g. The Board of Directors at its meeting held on 08 July, 2022 had approved the proposal to buy back its own fully paid up Equity Shares of face value H 1/- each up to a maximum price of H 60 per Equity Share (âMaximum Buyback Priceâ) payable in cash for an aggregate buy back consideration not exceeding H 600 Millions (âMaximum Offer Sizeâ) through the Open Market route on the Stock Exchanges from the equity shareholders / beneficial owners of the Equity Shares of the Company (other than those who are promoters, members of the promoter group and persons in control of the Company).
During the year, the Company bought back and accounted buy back of 6,474,276 equity shares which were extinguished on or before 18 January 2023 and completed the aforesaid buyback offer.
Aforesaid buyback offer resulted in a cash outflow of H 401.66 Million (including transaction costs of H 7.22 Million and tax on buyback of H 73.30 Million). The volume weighted average buyback price is H 49.60 per equity share comprising 1.58% of the pre buyback paid up equity share capital of the Company.
The Company funded the buy back from its free reserves, including securities premium, as explained in Section 68 of the Companies Act, 2013. In accordance with Section 69 of the Companies Act, 2013, the Company has created âCapital Redemption Reserveâ of H 6.47 Million equal to the nominal value of the shares bought back as an appropriation from Retained earnings.
The Company has not bought back equity shares for consideration other than cash during the period of five years immediately preceding the reporting date.
NOTE 36 : EMPLOYEE POST- RETIREMENT BENEFITS
The following are the employee benefit plans applicable to the employees of the Company
The Company also has a defined contribution plan. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation.
The Companyâs contribution to Provident Fund H 31.63 Million (31 March 2022: H 25.76 Million) has been recognised in Profit or Loss under the head Employee Benefits Expense.
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 an unfunded plan.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligations 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 defined benefit obligations has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
1. Changes in bond yields: A decrease in bond yields will increase plan liabilities.
2. 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.
3. Salary growth risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the planâs liability.â
iii Other long term employee benefits:
Compensated Absences: (included as a part of salaries and wages in Note 32 - Employee benefits expense) All eligible employees can carry forward and avail / encash leave as per Companyâs policies.
The Shareholders of the Company at the 30th Annual General Meeting held on 29 August 2022, approved Marksans Employees Stock Option Scheme 2022. Under the said scheme, the Company can grant a total of 8,186,273 options to the eligible employees for issue and allotment of equal number of equity shares of H 1/- each face value. The exercise price and other terms and conditions shall be as decided by the Compensation Committee at the time of grant of options from time to time. However, the said scheme has not been implemented yet.
The Companyâs capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. The same is done through a mix of either equity and/or preference and/or convertible and/or combination of short term/ long term debt as may be appropriate.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions, annual operating plans and long-term and other strategic investment plans. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The current capital structure of the Company is equity based with no financing through borrowings except through leasing. The Company is not subject to any externally imposed capital requirements. Net debt and equity is given in the table below:
The fair value of financial assets and liabilities are 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.
Fair value of cash and bank balances, trade receivables and other financial assets, trade payables, other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended March 31, 2022.
During the reporting period ending March 31, 2023 and March 31, 2022, there were no transfers between Level 1 and Level 2 fair value measurements.
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of following:
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy.
The Companyâs activities expose it to variety of financial risks namely market risk, credit risk and liquidity risk. The Company has various financial assets such as deposits, trade and other receivables and cash and bank balances directly related to their business operations. The Companyâs principal financial liabilities comprise of trade and other payables.
The Companyâs senior managementâs focus is to foresee the unpredictability and minimize potential adverse effects on the Companyâs financial performance. The Companyâs overall risk management procedures to minimise the potential adverse effects of financial market on the Companyâs performance are as follows :
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.
The Company has significant concentration of credit risk with respect to the sale of goods as the Company sells majority of the productions to the group companies. Management closely monitors the credit quality and collectability of receivables. Since majority of the Companyâs sales are to the group companies, there is no credit risk attached to the Companyâs receivables. Outstanding customer receivables other than group companies are regularly monitored and any shipments to new overseas customers are generally covered by letters of credit or other forms of credit insurance. The management continuously monitors the credit exposure towards the customers and makes provision against those balances considered doubtful of recovery. The Company establishes an allowances for credit losses and impairment that represents its estimates of Expected Credit Loss (ECL).
The Company held cash and cash equivalents and other bank balances of H 4,402.62 Million at 31 March, 2023 (31 March, 2022: H 2,240.48 Million). The cash and cash equivalents are held with bank and financial institution counterparties with good credit ratings.
As at the year ending 31 March 2023 and 31 March 2022, two customer is exceeding 10% of the Companyâs total trade receivables.
The Company continuously monitors defaults of customers and other counterparties, identified either individually or by the Company, and incorporates this information into its credit risk controls. The Companyâs policy is to deal only with creditworthy counterparties.
The Companyâs management considers that all the above financial assets that are not impaired at each of the reporting dates and are of good credit quality, including those that are past due.
Summary of the Companyâs exposure to credit risk by age of the outstanding from various customers is in Note 10.
Further, management believes that the unimpaired amounts that are past due by more than 180 days are still collectible in full, based on historical payment behaviour and extensive analysis of customer credit risk.
Other than trade and other receivables, the Company has no other financial assets that are past due but not impaired.
Liquidity risk is the risk that company will not be able to meet its financial obligations as they fall due. Liquidity risk arises because of the possibility that the Company could be required to pay its liabilities earlier than expected or encounters difficulty in raising funds to meet commitments associated with financial liabilities as they fall due. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. The Company manages liquidity risk by maintaining sufficient cash and bank balance and availability of funding through adequate amount of committed credit facilities.
The Companyâs activities are exposed to variety of financial risks. These risks include market risk (including foreign exchange risk and interest rate risks)
The Companyâs foreign currency risk arises from its foreign operations, investments in foreign subsidiaries and foreign currency transactions. The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company.
Since a major part of the Companyâs revenue is in foreign currency and major part of the costs are in Indian Rupees, any movement in currency rates would have impact on the Companyâs performance. Consequently, the overall objective of the foreign currency risk management is to minimize the short term currency impact on its revenue and cash-flow in order to improve the predictability of the financial performance.
The major foreign currency exposures for the Company are denominated in USD, GBP & EURO. Additionally, there are transactions which are entered into in other currencies and are not significant in relation to the total volume of the foreign currency exposures. The Company hedges its trade receivables based on historical trends, budgets and monthly sales estimates. The foreign exchange forward contracts are denominated in the same currency as the highly probable forecast sales.
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. Since the Company does not have any interest bearing borrowings, the exposure to risk of changes in market interest rates is minimal.
The Companyâs equity exposure in Subsidiaries, are carried at cost or deemed cost and these are subject to impairment testing as per the policy followed in this respect.
The companyâs current investments which are fair valued through profit and loss and are not material. Accordingly, other price risk of the financial instrument to which the company is exposed is not expected to be material.
Since the Company does not have any interest bearing financial liabilities, a change in interest rates at the reporting date would not have any significant impact on the financial statements of the Company. The Companyâs investments are primarily in fixed rate interest bearing investments. Hence, the Company is not significantly exposed to interest rate risk.
All transactions with related parties are made in the ordinary course of business and the same is at armâs length. Outstanding balances at the year end are unsecured and interest free and settlement occurs in cash. The Company has not recorded any impairment for receivables. This assessment is undertaken each financial year through examining the financial position of the related parties and the market in which related parties operate.
During the years ended 31 March 2023 and 31 March 2022, revenues from transactions with a single customer amount to 10% or more of the Companyâs revenues from customers includes 3 customers amounting to H 5,443.73 Million and H 5,719.57 Million respectively.
NOTE 42 : CONTINGENT LIABILITIES, CONTINGENT ASSETS AND COMMITMENTS
Particulars |
As at 31 March 2023 |
As at 31 March 2022 |
Income tax on account of disallowances / additions |
14.47 |
14.47 |
(i) It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the proceedings as it is determinable only on receipt of judgments / decisions pending with the forums / authorities.
(ii) The Company does not expect any reimbursements in respect of the above contingent liabilities.
(iii) The Companyâs pending litigations comprise of claims against the Company pertaining to proceedings pending with direct tax authorities. The Company has reviewed its proceedings and has adequately provided for where provisions are required or disclosed as contingent liabilities where applicable, in its standalone financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its standalone financial statements.
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are community healthcare, free food, sanitation & hygiene, environmental sustainability and education. A CSR committee has been formed by the Company as per the Act. The funds were primarily utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013:
The Company does not have any outstanding loans or borrowings (except redeemable preference shares) and repayment to lenders during the current and previous year. The Company has been sanctioned working capital limits from a bank through collateral security of equitable / registered mortgage on first pari-passu charge basis of whole of the movable fixed assets including without limitation movable plant and machinery, capital work in process, machinery spares, tools and accessories and other movables, present and future. Land bearing plot number L-82 & L-83, Phase II - E admeasuring 23,900 sq. mtrs. of the property known as Verna Industrial Estate situated in Goa together with all buildings and structures, machinery etc. on the said properties and hypothecation and first pari-passu change over the Companyâs entire current assets both present and future with other consortium member banks.
a. The Board of Directors, in the meeting held on 30 May 2023, has declared payment of interim dividend of H 0.50 per equity share of H 1/- each (50%) for the financial year 2022-23.
b. On 11 October 2022, the Company had entered in to a Business Transfer Agreement with Tevapharm India Private Limited to acquire its manufacturing facility relating to the manufacture and supply of pharmaceutical formulations in Goa as a going concern on a slump sale basis. Manufacturing site is spread across 47,597 square meters. This manufacturing facility has approvals to manufacture products from EU, Health Canada and Japanese Health Authority. The transaction is in cash consideration. Subsequent to 31 March, 2023, the Company has completed the said acquisition for a consideration of H 779.47 Million (excluding other acqusition cost) from Tevapharm India Private Limited. No impact for the said acquisition has been given in these standalone financial statements as this is a non adjusting event.
1 During the year the Company has redeemed at par entire 500,000 7% Redeemable cumulative preference shares aggregating to H 50 Million.
2 Due to the increase in the shareholderâs equity on account of conversion of warrants (Refer note 16 share capital)
3 Due to the increase in the trade receivables.
4 Due to the increase in the current assets mainly on account of increae in the cash and cash equivalents and other bank balances.
5 Due to increase in current assets on account of higher working capital levels.
NOTE 48 : OTHER STATUTORY INFORMATION
No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.
The Company has been sanctioned working capital limits in excess of H 50 Million in aggregate from a Bank on the basis of security of current assets. Quarterly returns are filed with such Bank which are in agreement with the books of account.
The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.
The Company has complied with the number of layers prescribed under the Companies Act, 2013.
The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
1. The Company has not advanced or loaned or invested funds to any other persons or entities, including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) 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
(b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries
2. The Company has not received any fund from any persons or entities, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) 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
(b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries
There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
i. Details of crypto currency or virtual currency
The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
The Company has not revalued its property, plant and equipment (including right to use assets) or intangible assets or both during the current or previous year.
Title deeds of all immovable properties are held in the name of the Company.
Mar 31, 2018
Marksans Pharma Limited (the "Company") is a public limited company incorporated in Mumbai, India. The registered office of the Company is at 11th Floor, Grandeur, Veera Desai Extension Road, Oshiwara, Andheri (West), Mumbai - 400053, India.
The Company is primarily engaged in the business of research, manufacture, marketing and sale of pharmaceutical formulation. The Company''s research and development facilities and manufacturing facilities are located at Plot no.L-82, & L-83, Verna Industrial Estate, Verna, Goa - 403722.
The Company''s shares are listed on the BSE Limited ("BSE") and the National Stock Exchange of India Limited ("NSE").
Note No. 1
Land held on leasehold basis. Building includes those constructed on leasehold land.
Note No. 3
Addition to Fixed Assets include capital expenditure of Nil (2017- Nil) incurred for Research and Development.
Note No. 4
Dividend accounts represent balance maintained in specific bank accounts for payment of dividends. The use of of these funds is restricted and can only be used to pay unclaimed dividend. The corresponding liability for payment of dividends is included in other current financial liability.
The Company has only one class of Equity Shares having a par value of HI/- per share. All the Equity Shares rank pari passu in all respect. Each holder of Equity Shares is entitled to one vote per share. The equity share holders are entitled to dividend, if declared by the shareholders in an Annual General Meeting, in proportion to the number of Equity Shares held by the shareholders. In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of Equity Shares held by the shareholders.
The Company has on 14th March, 2018 redeemed 100,000 7% Redeemable Cumulative Preference shares of HI00/- each(The Preference Shares) at par. Consequently , the Issued, Subscribed and Paid-up Preference Share Capital of the company has reduced from H11,00,00,000 (Rupees eleven crores ) divided into 1,100,000 Preference Shares of H 100/-each to H10,00,00,000(Rupees ten crore ) divided into 10,00,000 Preference shares of H100/- each with effect from 14th March, 2018.
With consent of the sole shareholder, redemption date of these preference shares have been extended upto 27th March, 2023 with right of Marksans Pharma Ltd to redeem at par in one or more tranches before that date at it''s option.
The preference shares carry dividend at the rate of 7% per annum subject to approval of the shareholders at an Annual General Meeting.
The holder of the preference shares is entitled to one vote per share only on resolutions placed before the Company which directly affect the rights attached to the preference shares. In the event of liquidation of the Company before redemption of the preference shares, the holder of the preference shares will have priority over equity shares in the payment of dividend and repayment of capital.
c. The Company has not issued bonus shares and shares for consideration other than cash nor the Company has bought back any shares during the period of five years immediately preceding the reporting date except redemption of 100,000 preference shares at par on 07.02.2015, 1,50,000 Preference shares at par on 31.03.2017 and 100,000 preference shares at par on 14.03.2018.
d. Details of shareholders holding more than 5% shares in the Company
Note No.5.
Working capital are secured by Hypothecation of all the current assets, receivables and book debts, and other movable assets of the Company in favour of the consortium by way of first charge on pari-passu basis and by way of second charge on the present and future fixed assets (both movable and immovable) of the company''s plant at Verna, Goa in favour of Consortium on a pari-passu basis.
The Company has taken working capital from banks at interest rates ranging between LIBOR 1% to 11.50%.
* The Company has not received any information from "Suppliers" regarding their status under Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to the amounts as at year end together with interest paid/payable as required under the said Act have not been given.
Note No. 6.
During the year ended 31st March, 2017, the remuneration paid to Dr. Vinay Gopal Nayak, Whole-time Director has exceeded the permissible limit as prescribed under Section 197 read with Schedule V of the Companies Act, 2013 by Rs. 79,52,068.00 due to inadeqancy of profit. Members of the Company have at the 25th AGM held on 26th September 2017 approved waiver of recovery of such excess payment subject to approval of the Central Government . The Company has submitted application to the Central Government for approval which is pending. Pending such approval, no adjustments have been made in the accounts for the year ended 31st March, 2017, and the excess amount is held by the Whole-time Director in trust for the Company.
The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements.
Corporate Social Responsibility expenditure for the year is Nil (previous year Nil).
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss. Fixed assets utilised for research and development are capitalised and depreciated in accordance with the policies stated for Fixed Assets.
The following are the employee benefit plans applicable to the employees of the Company.
In accordance with the applicable laws, the Company provides for gratuity, a defined benefit retirement plan ("the Gratuity Plan") covering eligible employees. The Gratuity Plan provides for a lump sum payment to vested employees on retirement, death, incapacitation or termination of employment of amounts that are based on salary and tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation.
Each sensitivity analysis result, disclosed here, is based on changing one assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be co-related. When calculating the sensitivity of the DBO to variations in significant actuarial assumptions, the same method (present value of the DBO calculated with the projected unit credit method at the end of the reporting period) has been applied as for calculating the liability recognised in the statement of financial position.
The Company permits encashment of leave accumulated by their employees on retirement and separation. The liability for encashment of privilege leave is determined and provided on the basis of actuarial valuation performed by an independent actuary at the date of the balance sheet.
Investment in Subsidiaries are carried at cost.
Trade receivables comprise amounts receivable from the sale of goods and services.
The management considers that the carrying amount of trade and other receivables approximates their fair value.
Bank balances and cash comprise cash and short-term deposits held by the Company. The carrying amount of these assets approximates their fair value.
Trade and other payables principally comprise amounts outstanding for trade purchases and on-going costs. The management considers that the carrying amount of trade payables approximates their fair value.
Fair value hierarchy :
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.
All amortised cost financial assets and liabilities are classified as level 3 inputs. credit risk analysis
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
The Company held cash and cash equivalents and other bank balances of Rs. 71.35 lakhs at March 31, 2018 (March 31, 2017: Rs. 256.18 lakhs, April 1, 2016 : Rs. 312.72 lakhs). The cash and cash equivalents are held with bank and financial institution counterparties with good credit ratings.
Trade receivables are usually due within 180 days. Generally and by practice most customers enjoy a credit period of approximately 180 days and are not interest bearing, which is the normal industry practice. All trade receivables are subject to credit risk exposure. However, the Company does not identify specific concentrations of credit risk with regard to trade and other receivables, as the amounts recognised represent a large number of receivables from various customers.
The Company continuously monitors defaults of customers and other counterparties, identified either individually or by the Company, and incorporates this information into its credit risk controls. The Company''s policy is to deal only with creditworthy counterparties.
The Company''s management considers that all the above financial assets that are not impaired at each of the reporting dates and are of good credit quality, including those that are past due.
In respect of trade and other receivables, the Company''s credit risk exposure towards any single counterparty or any Companies counterparties having similar characteristics is considered to be negligible. The credit risk for liquid funds and other short term financial assets is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.
The company has an exposure to credit risk by generally investing in subsidiaries. The company does not expect non performance by any of subsidiaries.
The Company manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash-outflows due in day-to-day business. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a 180-day and a 360-day lookout period are identified monthly.
The Company maintains cash and marketable securities to meet its liquidity requirements for up to 30-day periods. Funding in regards to long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities and the ability to sell long-term financial assets.
The Company''s capital management objectives are:
- to ensure the Company''s ability to continue as a going concern; and
- to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of the balance sheet. Capital for the reporting periods are summarised as follows:
The Company''s goal in capital management is to maintain a capital-to-overall financing structure ratio as low as possible.
The Company sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
Fair valuation for Financial Assets:
The Company has valued financial assets (other than Investment in subsidiaries are accounted at cost), at fair value. Impact of fair value changes as on the date of transition, is recognised in opening reserves and changes thereafter are recognised in Statement of Profit and Loss or Other Comprehensive Income, as the case may be.
Equity
In preparation of the financial statements in accordance with Previous GAAP, the Company provided for proposed dividend and tax thereon to comply with the schedule III requirements of the Companies Act, 2013. On transition to Ind AS, proposed dividend is recognised based on the recognition principles of Ind AS 37- ''Provisions, Contingent Liabilities and Contingent Assets. Considering that the dividend has been proposed after the date of financial statements and becomes payable only after approval by the shareholders, there is no present obligation to pay this dividend as at the date of statement of balance sheet. Accordingly, the liability for proposed dividend and tax thereon has been reversed.
Dividend on Preference share is recognised in Profit and loss as finance cost instead of charged to retain earning.
The Preference share require redemption on a specific date and for determined amount. The contractual obligation to deliver a cash at redemption exists and, therefore, preference share is considered as liability instead of equity.
Deferred tax
Deferred tax assets and liabilities under Indian GAAP were recorded only on timing differences. However, on transition to Ind AS, deferred tax assets and liabilities are recorded on temporary differences. On transition to Ind AS, the carrying values of assets and liabilities have undergone a change as a result of the adjustments indicated above, and accordingly, the deferred tax position has been recomputed after considering the new carrying amounts.
Remeasurement benefits
Under previous GAAP, remeasurement benefits on defined benefit obligation has been recognised in the statement of profit and loss. Ind AS 19 - Employee benefits required these remeasurement benefits to be recognised in other comprehensive income instead of statement of profit and loss.
Presentation differences
In the preparation of these Ind AS financial statements, the Company has made several presentation differences between Previous GAAP and Ind AS. These differences have no impact on reported profit or total equity. Accordingly, some assets and liabilities have been reclassified into another line item under Ind AS at the date of transition. Further, in these financial statements, some line items are described differently (renamed) under Ind AS as compared to Previous GAAP, although the assets and liabilities included in these line items are unaffected.
Interest rate sensitivity
The Company policy is to minimise interest rate cash flow risk exposures on long-term borrowing. The Company has taken several short term borrowings on fixed rate of interest. Since, there is no interest rate cash outflow associated with such fixed rate loans; an interest rate sensitivity analysis has not been performed.
The Company has outstanding borrowings of USD 3.67 million (2017 - USD 5.43 million) and GBP 3.14 million (2017 - GBP 2.64 million). In case of LIBOR/Benchmark prime lending rate (BPLR) increases by 100 basis points then such increase shall have the following impact on:
The Company is exposed to a variety of financial risks which results from the Company''s operating and investing activities. The Company''s risk management is coordinated, in close co-operation with the board of directors and the core management team of the subsidiaries, and focuses on actively securing the Company''s short to medium term cash flows by minimising the exposure to financial markets.
The Company does not actively engage in the trading of financial assets for speculative purposes nor does it write options.
Financial assets that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents, trade receivables, other receivables, investment securities and deposits. By their nature, all such financial instruments involve risk including the credit risk of non-performance by counter parties.
The Company''s cash equivalents and deposits are invested with banks.
The Company''s trade and other receivables are actively monitored to review credit worthiness of the customers to whom credit terms are granted and also avoid significant concentrations of credit risks.
EUR conversion rate was Rs. 69.45 at the beginning of the year and scaled to a high of Rs. 81.75 and to low of Rs. 68.06. The closing rate is Rs. 75.71. Considering the volatility in direction of strengthening EUR upto 10% , the sensitivity analysis has been disclosed at 10% movements on strengthening and weakening effect for presenting comparable movement due to currency fluctuations.
Under previous GAAP, remeasurement benefits on defined benefit obligation has been recognised in the statement of profit and loss. Ind AS 19 - Employee benefits required these remeasurement benefits to be recognised in other comprehensive income instead of statement of profit and loss.
In the preparation of these Ind AS financial statements, the Company has made several presentation differences between Previous GAAP and Ind AS. These differences have no impact on reported profit or total equity. Accordingly, some assets and liabilities have been reclassified into another line item under Ind AS at the date of transition. Further, in these financial statements, some line items are described differently (renamed) under Ind AS as compared to previous GAAP, although the assets and liabilities included in these line items are unaffected.
Mar 31, 2017
1 Borrowing costs
Borrowing costs are interest, amortization of ancillary cost incurred and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs incurred by the Company in connection with the borrowing of funds. Borrowing costs are recognized in the Statement of Profit and Loss in the period in which it is incurred, except where the cost is incurred for acquisition, construction, production or development of an asset that takes a substantial period of time to get ready for its intended use in which case it is capitalized up to the date the assets are ready for their intended use. Ancillary costs incurred in connection with the arrangement of borrowings are amortized over the period of such borrowings.
2. Segment Reporting as per AS 17
a. Business Segments
The Company is primarily engaged in a single business segment of manufacturing and marketing of Pharmaceutical Formulations and is managed as one entity for its various activities and is governed by a similar set of risks and returns.
b. Geographical Segments
In view of the management, the Indian and export markets represent geographical segments.
3. Leases Finance Leases
Assets leased by the Company in its capacity as lessee where substantially all the risks and rewards of ownership vest in the Company are classified as the finance leases.
Assets acquired under finance lease are recognized as assets with corresponding liabilities in the Balance Sheet at the inception of the lease at amounts equal to lower of the fair value of the leased asset or at the present value of the minimum lease payments. These leased assets are depreciated in line with the Company''s policy on depreciation of fixed assets. The interest is allocated to periods during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Operating Leases
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or are recognized as operating leases. Lease payments under operating leases are recognized in the Statement of Profit and Loss on a straight line basis over the lease term unless another systematic basis is more representative of the time pattern of the benefit.
4. Taxes on Income
Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the period.
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.
Deferred tax is recognized on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent period. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. Deferred tax assets are not recognized on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which deferred tax assets can be realized. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability.
Current and deferred tax relating to items directly recognizable in reserves are recognized in reserves and not in the Statement of Profit and Loss.
5. Current-non-current classification
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria in accordance with Schedule III to the Companies Act, 2013 as set out below:
Assets
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realized in, or is intended for sale or consumption in the Company''s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realized within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets.
All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company''s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include current portion of non-current financial liabilities.
All other liabilities are classified as non-current.
Operating Cycle
Operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company ascertains its operating cycle as 12 months for the purpose of current-non-current classification of assets and liabilities.
6. Tangible and Intangible fixed assets
a) Tangible fixed assets
Tangible fixed assets are stated at cost net of tax/duty credits availed, if any, less accumulated depreciation/ amortization/impairment losses. The cost of an item of tangible fixed asset comprises its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price.
Exchange differences (favorable as well as unfavorable) arising in respect of translation/ settlement of long term foreign currency borrowings attributable to the acquisition of a depreciable asset are also included in the
2 Significant Accounting Policies used in preparation of the Financial Statements of the Company (contd.) cost of the asset.
In case of fixed assets acquired at the time of amalgamation of certain entities with the Company, the same are recognized at book value in case of amalgamation in the nature of merger and at book value/ fair value in case of amalgamation in the nature of purchase in line with Accounting Standard (AS) 14 -"Accounting for Amalgamations".
Expenditure incurred on start up and commissioning of the project and/or substantial expansion, including the expenditure incurred on trial runs (net of trial run receipts, if any) up to the date of commencement of commercial production are capitalized. Subsequent expenditures related to an item of fixed asset are capitalized to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance. Losses arising from the retirement of, and gains or losses arising from disposal of fixed assets are recognized in the Statement of Profit and Loss.
Tangible fixed assets under construction are disclosed as capital work-in-progress.
Insurance spares/ standby equipments are capitalized as part of the mother asset and are depreciated at applicable rates over the remaining useful life of the mother assets.
b) Intangible fixed assets Acquired intangible assets
Intangible assets that are acquired are measured initially at cost. After initial recognition, an intangible asset is carried at its cost less any accumulated amortization and any accumulated impairment loss.
Subsequent expenditure is capitalized only when it increases the future economic benefits from the specific asset to which it relates.
Expenditure for acquisition and implementation of software systems is recognized as part of the intangible assets.
Internally generated intangible assets
Internally generated goodwill is not recognized as an asset. With regard to other internally generated intangible assets:
- Expenditure on research activities undertaken with the prospect of gaining new scientific or technical knowledge and understanding is recognized in the Statement of Profit and Loss as incurred.
- Development activities involve a plan or design for the production of new or substantially improved products or processes. Development expenditure including regulatory cost and legal expenses leading to product registration/ market authorization relating to the new and/or improved product and/or process development capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use the asset. The expenditure capitalized includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use, and directly attributable borrowing costs (in the same manner as in the case of tangible fixed assets). Other development expenditure is recognized in the Statement of Profit and Loss as incurred.
7. Impairment of Assets
The carrying values of assets/ cash generating units at each Balance Sheet date are reviewed for impairment if any indication of impairment exits.
The following intangible assets are tested for impairment each financial year even if there is no indication that the asset is impaired.: (a) an intangible asset that is not yet available for use; and (b) an intangible asset that is amortized over a period exceeding ten years from the date when the asset is available for use.
8. Significant Accounting Policies used in preparation of the Financial Statements of the Company (contd.)
If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognized for such excess amount. The impairment loss is recognized as an expense in the Statement of Profit and Loss, unless the asset is carried at revalued amount, in which case any impairment loss of the revalued asset is treated as a revaluation decrease to the extent a revaluation reserve is available for that asset.
The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor.
When there is indication that an impairment loss recognized for an asset (other than a revalued asset) in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, to the extent the amount was previously charged to the Statement of Profit and Loss. In case of revalued assets, such reversal is not recognized.
9. The Company has not received any information from "Suppliers" regarding their status under Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to the amounts as at year end together with interest paid/payable as required under the said Act have not been given.
10 Service tax input credit
Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing/ utilizing the credits.
11. Deferred Revenue Expenditure
The Company operates in an environment which requires the manufacturing facilities to be approved by industry regulators in certain territories prior to manufacture and sale of products in such territories . If the interval between the date the facility is ready to commence commercial production and the date at which commercial production is expected to commence is prolonged, all expenses incurred during this period are treated as deferred revenue expenditure and amortized over a period not exceeding 3 years from the date of receipt of approvals.
12. Exceptional items
The Company classifies the following as exceptional items in the Statement of Profit and Loss:
a) Exchange gain/loss arising on account of restatement and settlement of (i) long term foreign currency loans and advances, (ii) intra-group loans and advances;
b) Profit/loss on disposal of non-current investments and/ or dividends received from proceeds of such disposal and provision for/ reversals of provision for diminution in non- current investment, goodwill and other assets;
c) Profit/loss arising on account of discontinuance of products/ development activities;
d) Restructuring cost.
13. Customs / Excise Duty
Excise Duty on finished goods and Custom Duty on imported materials are accounted on production of packed finished goods /receipt of material in custom bonded warehouses. All the closing stock of finished goods lying at Goa factory is for export, hence provision for excise duty is not made.
14. Nature and extent of risks arising from financial instruments
The main financial risks faced by the Company relate to fluctuations in interest and foreign exchange rates, the risk of default by counterparties to financial transactions, and the availability of funds to meet business needs. The Balance Sheet as at March 31, 2017 is representative of the position through the year.
Credit Risk
Credit risk arises from Cash and Cash equivalents, financial instruments and deposits with banks and financial institutions. Credit risk also arises from trade receivables and other financial assets.
The credit risk arising from receivables is subject to concentration risk in that the receivables are predominantly 2 Significant Accounting Policies used in preparation of the Financial Statements of the Company (contd.) denominated in USD & GBP and any appreciation in the INR will affect the credit risk. The Company is not significantly exposed to geographical distribution risk as the counterparties operate across various countries across the Globe.
Foreign exchange risk
The Company is exposed to foreign exchange risk principally via:-
i. Debt availed in foreign currencies.
ii. Net investments in subsidiaries that are in foreign currencies.
iii. Exposure arising from transaction relating to purchases, revenues, expenses etc, to be settled in currencies other than the functional currency of the Company.
Liquidity Risk
Liquidity risk is managed using short term and long term Cash Flow forecasts.
Risk Management is carried out by the Risk Management Committee as per the Risk Management Policy adopted by the Company.
15Research and development expenditure
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss. Fixed assets utilized for research and development are capitalized and depreciated in accordance with the policies stated for Fixed Assets.
16. Related Party Disclosures
(a) List of Related Parties Subsidiaries
Marksans Pharma (UK) Limited Marksans Holdings Limited Bell, Sons and Co. (Druggists) Limited Relonchem Limited Marksans Pharma Inc.
Time-Cap Laboratories Inc.
Custom Coatings Inc.
Marksans Realty LLC
Nova Pharmaceuticals Australasia Pty Ltd.
Key Management Personnel (KMP)
Mr. Mark Saldanha - Managing Director Mrs. Sandra Saldanha - Whole-time Director Dr. Vinay Gopal Nayak - Whole-time Director Mr. Jitendra Sharma - Chief Financial Officer Mr. Harshavardhan Panigrahi - Company Secretary
Relatives of KMP
Mrs. Sandra Saldanha is spouse of Mr. Mark Saldanha (Managing Director) Mr. Mark Saldanha is spouse of Mrs. Sandra Saldanha (Whole-time Director)
Companies in which KMP is interested
Marksans Pharma (UK) Limited Marksans Holdings Limited Bell, Sons and Co. (Druggists) Limited Relonchem Limited Marksans Pharma Inc.
Time-Cap Laboratories Inc.
Custom Coatings Inc.
Marksans Realty LLC
Nova Pharmaceuticals Australasia Pty Ltd.
Note: Mr. Mark Saldanha/ Mrs. Sandra Saldanha/ Mr. Jitendra Sharma is/are Director in the above subsidiary(ies) as representative of Marksans Pharma Limited and have no personal interest as director of those subsidiary(ies). They do not own any shares in the subsidiary(ies) in which they are Director.
(b) As required by Accounting Standard 18 "Related Parties Disclosure" issued by The Institute of Chartered Accountants of India, list of parties with whom transactions have taken place during the year are as follows:
Rent paid to Mr. Mark Saldanha of Rs. 102.93 Lakh during the year.
Related parties where control exists and transactions have taken place during the year Subsidiary Companies
Marksans Pharma (UK) Limited Time-Cap Laboratories Inc.
Nova Pharmaceuticals Australasia Pty Ltd.
Related party relationships where transactions have taken place during the year
Marksans Pharma (UK) Limited - Subsidiary Company
Time-Cap Laboratories Inc. - Subsidiary Company
Nova Pharmaceuticals Australasia Pty Ltd. - Subsidiary Company
17 Provisions, Contingent Liabilities & Contingent Assets
The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or a present obligation that the liklihood of outflow of resources is remote, no provision or disclosure is made. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognized in the financial statements.
18. Figures of the previous year have been regrouped and re-arranged wherever necessary, so as to make them comparable with the current year''s figures.
b. Terms/rights attached to Equity Shares
The Company has only one class of Equity Shares having a par value of H1/- per share. All the Equity Shares rank pari passu in all respect. Each holder of Equity Shares is entitled to one vote per share. The equity share holders are entitled to dividend, if declared by the shareholders in an Annual General Meeting, in proportion to the number of Equity Shares held by the shareholders.
In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of Equity Shares held by the shareholders.
c. Terms/rights attached to Preference Shares
The company has on 31st March, 2017 redeemed 150,000 7% Redeemable Cumulative Preference Shares of H100/-each (The Preference Shares) at par. Consequently, the Issued, Subscribed and Paid-up Preference Share Capital of the Company has reduced from H125,000,000 (Rupees twelve crores fifty lakh) divided into 1,250,000 Preference Shares of H100/- each to H1,10,000,000 (Rupees eleven crore) divided into 1,100,000 Preference Shares of H100/- each with effect from 31st March, 2017. The preference shares carry dividend at the rate of 7% per annum subject to approval of the shareholders at an Annual General Meeting. The holder of the preference shares is entitled to one vote per share only on resolutions placed before the Company which directly affect the rights attached to the preference shares. In the event of liquidation of the Company before redemption of the Preference Shares, the holder of the preference Shares will have priority over equity shares in the payment of dividend and repayment of capital.
d. The Company has not issued bonus shares and shares for consideration other than cash nor the Company has bought back any shares during the period of five years immediately preceding the reporting date except redemption of 100,000 Preference Shares at par on 07.02.2015 and 150,000 Preference Shares at par on 31.03.2017.
(Information provided in Brackets pertain to Previous year)
Note No.19
During the FY.2016-17, the Company has invested H19,552,500(USD 300,000) in Marksans Pharma Inc. and H8,978,986(GBP 104,376) in Marksans Pharma (UK) Ltd.
Note No. 20
During the year ended 31st March, 2017, the remuneration paid to Dr. Vinay Gopal Nayak, Whole-time Director has exceeded the permissible limit as prescribed under Section 197 read with Schedule V of the Companies Act, 2013 by Rs. 79,52,068.00 (Previous Year Rs. Nil). The Company is in the process of complying with the statutory requirements prescribed to regularise such excess payment including seeking approval from Members and the Central Government, as necessary. Pending such approvals, no adjustments have been made in the accounts for the year ended 31st March, 2017, and the excess amount is held by the Whole-time Director in trust for the Company.
Mar 31, 2016
Notes :
1 The Cash Flow Statement has been prepared under the ''Indirect Method'' as set out in Accounting Standard - 3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India.
2 The Previous year''s figures have been regrouped wherever necessary in order to conform to this year''s presentation.
Mar 31, 2015
1. Contingent liabilities and commitments (to the extent not provided
for)
Particulars 2014-2015 2013-2014
(Rs. in lacs) (Rs.in lacs)
Contingent Liabilities
(a) Claims against the company not
acknowledged as debt 20.60 25.68
(b) Guarantees and Letter of Credit 5,529.81 8,342.30
(c) Other money for which the company
is contingently liable Sales Tax
Sales Tax (BST,CST) Â 03-04 5.06 5.06
Sales Tax (BST,CST) Â 04-05 7.90 7.90
5,563.37 8,380.94
2.Foreign Currency Convertible Bonds (Bonds)
The Company had signed settlement agreement with few bond holders for
settlement of 36,789 Bonds of USD 1,000 each in principal value
representing about 97% of the outstanding bonds during February 2013.
Out of that 21,511 bonds have been settled and cancelled. One bond
holder holding 15,278 Bonds has defaulted in surrendering the third and
final tranche bonds as per the settlement agreement even though the
company was ready to pay the settlement consideration. They had already
executed and surrendered first and second tranche bonds which were
subsequently cancelled and extinguished but have defaulted in executing
the third and final tranche settlement. The company has, therefore,
filed a suit in the High Court of England for specific performance by
the bond holder in accordance with the settlement agreement. In the
meantime, the English High Court has granted injunction restraining the
bond holder from selling or transferring their bonds to or create any
interest in such bonds in favour of any person or entity other than the
Company until further order of the court.
3. Accounting for Employee benefits
Liabilities for gratuity & other retirement benefits are accounted on
accrual basis.
4. Segment Reporting as per AS 17
Business Segments
The Company is primarily engaged in a single business segment of
manufacturing and marketing of Pharmaceutical Formulations and is
managed as one entity for its various activities and is governed by a
similar set of risks and returns.
5. Finance Leases
Assets acquired under finance lease are recognised as assets with
corresponding liabilities in the Balance Sheet at the inception of the
lease at amounts equal to lower of the fair value of the leased asset
or at the present value of the minimum lease payments. These leased
assets are depreciated in line with the Company's policy on
depreciation of fixed assets. The interest is allocated to periods
during the lease term so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period.
Operating Leases
Lease rent in respect of assets taken on operating lease are charged to
the statement of Profit and Loss as per the terms of lease agreements.
6. Earnings per share
As per Accounting Standard 20 "Earnings Per Share" issued by ICAI,
basic earnings per share is calculated by dividing the net profit for
the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the year.
7. The Company has not received any information from "Suppliers"
regarding their status under Micro, Small and Medium enterprises
Development Act, 2006 and hence disclosures, if any, relating to the
amounts as at year end together with interest paid/payable as required
under the said Act have not been given.
8. Research and development expenditure
During the year, the Company expensed H1,719.83 Lacs (Previous year
H1975.63 Lacs) as research and development costs.
9. Corporate Social Responsibility
Corporate Social Responsibility expenditure is not applicable for the
year.
10.Figures of the previous year have been regrouped and re-arranged
wherever necessary, so as to make them comparable with the current
year's figures.
* The Company has on 30th March, 2015 issued and allotted 2,40,06,494
Equity Shares of H1/- each face value to qualified institutional buyers
under QIP pursuant to Section 42 of the Companies Act, 2013 and Chapter
VIII of SEBI (Issue of Capital and Disclosure Requirements)
Regulations, 2009 at H54.67 (including premium) determined in
accordance with the said SEBI Regulations. Accordingly, the Issued,
Subscribed and Paid-up Equity Share Capital of the Company has
increased from H38,53,07,204 (Rupees thirty eight crore fifty three lac
seven thousand two hundred four only) divided into 38,53,07,204 (thirty
eight crore fifty three lac seven thousand two hundred four only)
Equity Shares of H1/- (Rupee one only) each to H40,93,13,698/- (Rupees
forty crore ninety three lac thirteen thousand six hundred ninety eight
only) divided into 40,93,13,698 (Forty crore ninety three lac thirteen
thousand six hundred ninety eight only) Equity Shares of H1/- (Rupee
one only) each with effect from 30th March, 2015.
** In accordance with the terms of issue of 7% Redeemable Cumulative
Preference Shares of H100/- each (the Preference Shares), the Company
has decided to pre-redeem the preference shares in tranches before the
redemption date of 27th March, 2018. Accordingly, the Company has on
07th February, 2015 redeemed 1,00,000 Preference Shares at par.
Consequently, the Issued, Subscribed and Paid-up Preference Share
Capital of the Company has reduced from H13,50,00,000 (Rupees thirteen
crore fifty lac only) divided into 13,50,000 (thirteen lac fifty
thousand only) Preference Shares of H100/- (Rupees one hundred only)
each to H12,50,00,000 (Rupees twelve crore fifty lac only) divided into
12,50,000 (twelve lac fifty thousand only) Preference Shares of H100/-
(Rupees one hundred only) each with effect from 07th February, 2015.
b. Terms/rights attached to Equity Shares
The Company has only one class of Equity Shares having a par value of
H1/- per share. All the Equity Shares rank pari passu in all respect.
Each holder of Equity Shares is entitled to one vote per share. The
equity share holders are entitled to dividend, if declared by the
shareholders in an Annual General Meeting, in proportion to the number
of Equity Shares held by the shareholders.
In the event of liquidation of the Company, the holders of Equity
Shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of Equity Shares held by the
shareholders.
c. Terms/rights attached to Preference Shares
The Company had issued 1,350,000 7% Redeemable Cumulative Preference
Shares of H100/- each (Preference Shares) fully paid- up to Glenmark
Pharmaceuticals Limited on 27th March, 2013 against redemption of
1,350,000 7% Redeemable Cumulative Preference Shares of H100/- each
issued on 27th March, 2008. These new preference shares will be due for
redemption on 27th March,2018. However, In accordance with the terms of
issue, the Company has decided to pre-redeem the preference shares in
tranches before the redemption date of 27th March, 2018.
Accordingly, the Company has on 07th February, 2015 redeemed 1,00,000
Preference Shares at par . These preference shares carry dividend at
the rate of 7% per annum subject to approval of the shareholders at an
Annual General Meeting. The holder of the preference shares is entitled
to one vote per share only on resolutions placed before the Company
which directly affect the rights attached to the preference shares. In
the event of liquidation of the Company before redemption of the
preference shares, the holder of the preference shares will have
priority over equity shares in the payment of dividend and repayment of
capital.
d. The company has not issued bonus shares and shares for
consideration other than cash nor the company has bought back any
shares during the period of five years immediately preceding the
reporting date except redemption of preference shares as stated in Note
No.3a above.
e. As on 31st March, 2015, 61 Bonds of USD 1000 each in principal
value are unsettled and outstanding as they are remaining untraceable.
In accordance with the terms of the issue of the Bonds, these Bonds
carry conversion rights until they are redeemed or repurchased.
Accordingly, 81,314 equity shares of H1/- each will be issued in case
the bond holders opt for the conversion of the said 61 Bonds into
equity shares.
11. Foreign Curreny Convertible Bonds (Bonds)
The Company had issued 50,000 Bonds of USD 1,000 each in principal
value. Out of that, the Company has bought back/ entered into
settlement agreement for 49,939 Bonds. Under the settlement agreement,
USD 5,250,000 is remaining to be paid as on 31st March, 2015. The
balance 61 Bonds are outstanding as on 31st March, 2015 as the same are
untraceable. Adequate provisions have been made in the books of
account for both these cases. Accordingly, the current outstanding
(including payables under the settlement agreement) as above is USD
5,338,572 (H334,218,095) as on 31st March, 2015.
12. Current maturities of Term Loan
The term loan is secured by hypothecation of current assets and all the
movable fixed assets, equitable mortgage of the immovable assets and
personal guarantee by Mr.Mark Saldanha, Managing Director. There areno
overdues repayment of the term loan.
Mar 31, 2014
BACKGROUND
Marksans Pharma Limited (The Company) together with it''s subsidiaries,
operates as an international pharmaceutical organisation with business
encompassing the research, manufacturing, marketing and distribution of
pharmaceutical products.
The company''s equity shares are listed for trading on the National
Stock Exchange and the Bombay Stock Exchange in India.
The Company has been de-registered from the purview of SICA and is no
longer in BIFR as per the directions of the Honorable BIFR in its
hearing held on 17th July 2013.
Contingent liabilities and commitments (to the extent not provided for)
(Rs in lacs)
Particulars 2013-2014 2012-2013
Contingent Liabilities
(a) Claims against the company not
acknowledged as debt 25.68 142.93
(b) Guarantees and Letter of Credit 8,342.30 8,339.05
(c) Other money for which the company is
contingently liable Sales Tax
Sales Tax (BST,CST) - 03-04 5.06 20.21
Sales Tax (BST,CST) - 04-05 7.90 7.90
(d) Foreign Currency Convertible Bonds - 15,192.89
8,380.94 23,702.98
2.16 Foreign Currency Convertible Bonds
The Company had signed settlement agreement with few bond holders for
settlement of 36,789 Bonds of USD 1000 each in principal value
representing about 97% of the outstanding bonds during February 2013.
One bond holder holding 15,278 Bonds has defaulted in surrendering the
third and final tranche bonds as per the settlement agreement even
though the company was ready to pay the settlement consideration. They
had already executed and surrendered first and second tranche bonds
which were subsequently cancelled and extinguished but have defaulted
in executing the third and final tranche settlement. The company has,
therefore, filed a suit in the High Court of England for specific
performance by the bond holder in accordance with the settlement
agreement. In the meantime, the English High Court has granted
injunction restraining the bond holder from selling or transferring
their bonds to or create any interest in such bonds in favour of any
person or entity other than the Company until further order of the
court.
2.17 Foreign Exchange Transactions
As required by Accounting Standard 11 "the effect of changes in the
foreign exchange rates", the company has restated its assets &
liabilities at the closing exchange rate prevailing at the Balance
Sheet date.
2.18 Accounting for Employee benefits
Liabilities for gratuity & other retirement benefits are accounted on
accrual basis.
2.19 Segment Reporting as per AS 17
BUSINESS SEGMENTS
The Company is primarily engaged in a single business segment of
manufacturing and marketing of Pharmaceutical Formulations and is
managed as one entity for its various activities and is governed by a
similar set of risks and returns.
2.20 Related Party Disclosures
As required by Accounting Standard 18 "Related Parties Disclosure"
issued by The Institute of Chartered Accountants of India, list of
parties with whom transactions have taken place during the year are as
follows:
Rent paid to Mr. Mark Saldanha of H110.96 Lacs during the year.
(b) Parties where control exists Subsidiary Companies
Nova Pharmaceuticals Australasia Pty Ltd
Marksans Pharma (UK) Limited
(c) Related party relationships where transaction have taken place
during the year Nova Pharmaceuticals Australasia Pty Ltd - Subsidiary
Company
Marksans Pharma (UK) Limited - Subsidiary Company
2.21 Remuneration paid/payable to the Directors for the financial year
ended 31st March, 2014, is in accordance with the provisions of section
198 read with section 304(3) of the Companies Act, 1956.
2.22 Finance Leases
Assets acquired under finance lease are recognised as assets with
corresponding liabilities in the Balance Sheet at the inception of the
lease at amounts equal to lower of the fair value of the leased asset
or at the present value of the minimum lease payments. These leased
assets are depreciated in line with the Company''s policy on
depreciation of fixed assets. The interest is allocated to periods
during the lease term so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period.
Operating Leases
Lease rent in respect of assets taken on operating lease are charged to
the statement of profit and loss as per the terms of lease agreements.
2.23 Earnings per share
As per Accounting Standard 20 "Earnings Per Share" issued by ICAI,
basic earnings per share is calculated by dividing the net profit for
the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the year.
The calculations of earnings per share (basic and diluted) are based on
the earnings and number of shares as computed below.
2.24 The Company has not received any information from "Suppliers"
regarding their status under Micro, Small and Medium Enterprises
Development Act, 2006 and hence disclosures, if any, relating to the
amounts as at year end together with interest paid/payable as required
under the said Act have not been given.
2.25 Research and development expenditure
During the year, the Company expensed H1975.63 Lacs (Previous year
H453.77) as research and development costs.
2.26 Additional information pursuant to the provisions of paragraphs 3,
4C, 4D of Part II of Schedule VI to the Companies Act, 1956 (figures in
brackets relates to the previous year)
2.27 Figures of the previous year have been regrouped and re-arranged
wherever necessary, so as to make them comparable with the current
year''s figures.
b. Terms/rights attached to Equity Shares
The Company has only one class of Equity Shares having a par value of
H1/- per share. All the Equity Shares rank pari passu in all respect.
Each holder of Equity Shares is entitled to one vote per share. The
equity share holders are entitled to dividend, if declared by the
shareholders in an Annual General Meeting, in proportion to the number
of Equity Shares held by the shareholders.
In the event of liquidation of the Company, the holders of Equity
Shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of Equity Shares held by the
shareholders.
c. Terms/rights attached to Preference Shares
The Company has issued 1,350,000 7% Redeemable Cumulative Preference
Shares of H100/- each fully paid-up to Glenmark Pharmaceuticals Limited
on 27th March, 2013 against redemption of 1,350,000 7%Redeemable
Cumulative Preference Shares of H100/- each issued on 27.03.2008. These
new preference shares will be due for redemption on 27th March, 2018.
These preference shares carry dividend at the rate of 7% per annum
subject to approval of the shareholders at an Annual General Meeting.
The holder of the preference shares is entitled to one vote per share
only on resolutions placed before the Company which directly affect the
rights attached to the preference shares. In the event of liquidation
of the Company before redemption of the preference shares, the holder
of the preference shares will have priority over equity shares in the
payment of dividend and repayment of capital.
d. The company has not issued bonus shares and shares for
consideration other than cash nor the company has bought back any
shares during the period of five years immediately preceding the
reporting date except the issue of preference shares as stated in Note
No.3c above.
5.1 The term loan is secured by a charge on the plants and machineries
of Goa plants. There are no overdues repayment of the term loan.
Maturity profile of Term Loan are as set out below.
9.1 Foreign Curreny Convertible Bonds
The Foreign Currency Convertible Bonds had become due for redemption on
9th November, 2010 and were not redeemed.
These Bonds have redemption premium of 45.20% of the principal value.
Further, due to the redemption default, the redemption amount attracts
default interest at 8% p.a. from the due date of redemption.
The current outstanding(Including payables under settlement agreement
signed with few bond holders is USD 10,398,954 (Rs.621,966,636) as at
31.03.2014.
12.2 Marksans Pharma Ltd had made an investment of GBP 8,491,565 in
Marksans Pharma (UK) Limited shown as advance in the books of Marksans
Pharma (UK) Ltd. Marksans Pharma (UK) Ltd. has issued and allotted
8,491,565 ordinary shares of GBP 1 each in consideration of the said
advance. Accordingly, the shareholding of Marksans Pharma Limited in
Marksans Pharma (UK) Limited has increased from 1000 ordinary shares of
GBP 1 each to 8,492,565 ordinary shares of GBP 1 each.
Mar 31, 2013
1 Background
Marksans Pharma Limited (The Company) together with it''s subsidiaries
and associates, operates as an international pharmaceutical
organisation with business encompassing the research, manufacturing,
marketing and distribution of pharmaceutical products.
The company''s equity shares are listed for trading on the National
Stock Exchange and the Bombay Stock Exchange in India.
As per the audited Balance Sheet as at 31 March, 2011, the Company''s
Net Worth had been completely eroded. Therefore, as required under
Section 15(1) of the SICA 1985, the Company has made a reference to the
Board for Industrial and Financial Reconstruction (BIFR).
Due to settlement of the substantial amount of the FCCBs and improved
financial performance of the Company, the Net Worth of the Company has
turned positive as at 31 March, 2013. Under the circumstances, the
Company will seek withdrawal of its reference and will await necessary
directives from the BIFR.
2.1 PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS
Provisions are recognized for liabilities that can be measured only by
using a substantial degree of estimation, if
a. the Company has a present obligation as a result of past event,
b. a probable outflow of resources is expected to settle the
obligation; and
c. the amount of the obligation can be reliably estimated.
Contingent liability is not recognized but disclosed in the Notes to
the Accounts.
The Contingent Assets are neither recognized, nor disclosed.
Provisions, Contingent Liabilities and Contingent Assets are reviewed
at each Balance Sheet date.
Contingent liabilities and commitments (to the extent not provided for)
(Rs.in lacs)
Particulars 2012-13 2011-12
Contingent Liabilities
(a) Claims against the
company not acknowledged as debt 142.93 174.09
(b) Guarantees and Letter of Credit 8,339.05 14,947.22
(c) Other money for which the
company is contingently liable
Sales Tax
Sales Tax (BST,CST) - 03-04 20.21 20.21
Sales Tax (BST,CST) - 04-05 7.90 7.90
Sales Tax (CST) - 06-07 3.23
(d) Foreign Currency Convertible Bonds 15,192.89
23,702.98 15,152.65
(i) The Company has signed Settlement Agreement with few bond holders
for settlement of principal value of USD 36,789,000 worth of Bonds.
Under the Settlement Agreement, the settlement amount is payable over a
period of 12 months from the date of signing the respective agreements.
Accordingly, the Company has written back the entire amount of USD
36,789,000 Bonds alongwith redemption premium of USD 16,628,628
(aggregating to USD 53,417,628) and provided for new liability based on
the settlement payout in terms of the Settlement Agreement in the books
of accounts for the year ended 31 March, 2013.
In case the Company delays in making the payment of the balance
consideration (as provided in the books of accounts), the Company will
have to pay surcharge for the delayed payment in terms of the
Settlement Agreement. However, if the delay is beyond 28 months from
the date of signing the Agreement, then the said Agreement will be
treated as terminated and the liability towards outstanding bonds along
with redemption premium already written back will be re-instated in the
books of accounts.
2.2 Foreign Exchange Transactions
As required by Accounting Standard 11 "the effect of changes in the
foreign exchange rates", the company has restated its assets &
liabilities at the closing exchange rate prevailing at the Balance
Sheet date.
2.3 Accounting for Employee benefits
Liabilities for gratuity & other retirement benefits are accounted on
accrual basis.
2.4 Segment Reporting as per AS 17
BUSINESS SEGMENTS
The Company is primarily engaged in a single business segment of
manufacturing and marketing of Pharmaceutical Formulations and is
managed as one entity for its various activities and is governed by a
similar set of risks and returns.
2.5 Related Party Disclosures
As required by Accounting Standard 18 "Related Parties Disclosure"
issued by The Institute of Chartered Accountants of India, list of
parties with whom transactions have taken place during the year are as
follows:
(b) Parties where control exists
Subsidiary Companies
Nova Pharmaceuticals Australasia Pty Ltd
Marksans Pharma (UK) Limited
(c) Related party relationships where transaction have taken place
during the year
Nova Pharmaceuticals Australasia Pty Ltd - Subsidiary Company Marksans
Pharma (UK) Limited - Subsidiary Company
2.6 Remuneration paid/payable to the Directors for the financial year
ended 31 march 2013, is in accordance with the provisions of section
198 read with section 304(3) of the Companies Act, 1956.
2.7 Accounting for Leases
Assets acquired under finance leases are recognised at the lower of the
fair value of the leased assets at inception and the present value of
minimum lease payments. Lease payments are apportioned between the
finance charge and the outstanding liability. The finance charge is
allocated to periods during the lease term at a constant periodic rate
of interest on the remaining balance of the liability.
Lease rentals in respect of assets taken under operating leases are
charged to the statement of Profit and Loss on a straight line basis
over the lease term.
The Company has taken various residential and commercial premises on
cancelable operating lease or leave & license agreement The lease
agreement which are non cancelable are for period of three years. The
rental expenses of such cancelable operating lease are recognized as
rent expenses in the Statement of Profit and Loss. The Leasing
arrangements which are cancelable range between 11 months and 3 years
and are usually renewable by mutual consent on mutually agreeable
terms. Under these arrangements, generally interest free deposits have
been given.
2.8 The Company has not received any information from "Suppliers"
regarding their status under Micro, Small and Medium enterprises
Development Act, 2006 and hence disclosures, if any, relating to the
amounts as at year end together with interest paid/payable as required
under the said Act have not been given.
2.9 Figures of the previous year have been regrouped and re-arranged
wherever necessary, so as to make them comparable with the current
year''s figures.
Mar 31, 2012
1 Background
Marksans Pharma Limited (The Company) together with its subsidiaries
and associates, operate as an integrated international pharmaceutical
organisation with business encompassing the entire value change in and
distribution of pharmaceutical products.
The company's equity shares are listed for trading on the National
Stock Exchange and the Bombay Stock Exchange in India.
As per the audited Balance Sheet as at 31st March, 2011, the
Company's Net Worth had been completely eroded.
Therefore, as required under Section 15 (1) of the Sick Industrial
Companies (Special Provisions) Act, 1985, the company has made a
reference to the Board for Industrial and Financial Reconstruction
(BIFR) for measures to be determined with respect to the company.
Accordingly, the company is registered with the BIFR.
a. Terms/rights attached to Equity Shares
The Company has only one class of Equity Shares having a par value of Rs.
1/- per share. All the Equity Shares rank pari passu in all respect.
Each holder of Equity Shares is entitled to one vote per share. The
equity share holders are entitled to dividend, if declared by the
shareholders in an Annual General Meeting, in proportion to the number
of Equity Shares held by the shareholders. In the event of liquidation
of the Company, the holders of Equity Shares will be entitled to
receive remaining assets of the Company, after distribution of all
preferential amounts. The distribution will be in proportion to the
number of Equity Shares held by the shareholders.
b. Terms/rights attached to Preference Shares
The Company has issued 1,350,000 7% Redeemable Cumulative Preference
Shares of Rs. 100/- each fully paid-up to Glenmark Pharmaceuticals
Limited on 27 March, 2008. These preference shares carry dividend at
the rate of 7% per annum subject to approval of the shareholders at an
Annual General Meeting. These preference shares will be redeemed at par
on 27th March, 2013. The holder of the preference shares is entitled to
one vote per share only on resolutions placed before the Company which
directly affect the rights attached to the preference shares. In the
event of liquidation of the Company before redemption of the preference
shares, the holder of the preference shares will have priority over
equity shares in the payment of dividend and repayment of capital.
c. The company has not issued bonus shares and shares for
consideration other than cash nor the company has bought back any
shares during the period of five years immediately preceding the
reporting date.
d. Pursuant to the special Resolution passed by the share holders at
the Annual General Meeting held on 29th September, 2011, the Board of
Directors of the company at its meeting held on 25th October, 2011
allotted 17,500,000 warrants to Mr. Mark Saldanha, Promoter of the
company at a price of Rs. 2.56 per warrant on preferential basis and
received Rs. 11,565,500 being 25.81% upfront price. Mr. Mark Saldanha is
entitled to apply for allotment of one fully paid up equity share of Rs.
1/- each against each warrant at any time after the date of allotment
but on or before expiry of 18 months from the date of allotment.
Note No. 1.1
Working capital facilities are secured by Hypothecation of stock of raw
material, packing material, finished goods, work-in- progress,
receivables and equitable mortgage on fixed assets of manufacturing
facility of Goa plants, present and future.
*Note No. 2.1 Foreign Currency Convertible Bonds
The current outstanding of principal value of Foreign Currency
Convertible Bonds of Rs. 19746.64 Lacs have become due for redemption on
9th November, 2010 and were not redeemed. These Bonds have redemption
premium of Rs. 8925.48 Lacs. Further, due to the redemption default,
there will be a default interest payable at 8% p.a. from the due date
of redemption which has not yet been provided.
Note No.3.1
Land held on leasehold basis. Building includes those constructed on
leasehold land.
The company has internally generated intangible assets in the nature of
ANDA/Market Authorisation/Site Variation Licenses for CRAMS. The
expenses incurred on development of process/product and compliance with
regulatory procedures of US FDA and other global health authorities in
filing of Abbreviated New Drug Application (ANDA), Market
Authorisation/Site Variation Licenses for CRAMS and MHRA procedure for
Market Authorisation/Site Variation Licenses are capitalised and
identified as intangible assets in accordance with AS - 26 (Intangible
Assets). Some of these intangible assets are out licensed to overseas
parties giving them exclusive/semi exclusive rights to market the
company's products in the international markets.
The Company has carried out an assessment on the impairment of the
intangible assets in accordance with AS - 28 (Impairment of Assets).
Accordingly, the carrying value of the Intangible Assets have been
reduced to their recoverable amount in the Balance Sheet as on 31 March
2012 and the amount of such impairment loss has been charged to the
Statement of Profit and Loss in accordance with AS - 28. The
recoverable amount is as per the binding out licensing/distribution
agreements for the respective products.
In some cases of Site Variation Licenses for CRAMS, the Company has
either terminated the agreement and/or stopped manufacturing and
supplying of the products. The relative capitalised development cost
has been written off and charged to the Statement of Profit and Loss
during the financial year ended 31 March, 2012.
Note No.4.1
The Company, in the year 2008, acquired two UK based companies Bell,
Sons and Co (Druggists) Limited and Relonchem Limited through its 100%
subsidiary, Marksans Pharma (UK) Limited. The company has made an
investment of Rs. 68.78 Crores to part finance above
acquisitions.However, Relonchem Limited has been incurring losses and
Bell, Sons and Co (Druggists) Limited has failed to meet the
expectations. Therefore, the Management has carried out an analysis of
the value of investment in subsidiaries. The analysis is based on
financial projections and market valuation of the peer companies
operating in the similar area of operation. This analysis indicated a
diminution in the realisable value of investment in the subsidiaries.
Accordingly, the carrying value of the investment in subsidiaries has
been reduced in the Balance Sheet as on 31 March, 2012 and the amount
of the diminution of Rs. 4686 Lacs has been charged to the Statement of
Profit and Loss for the year ended 31 March, 2012 in accordance with AS
- 13 (Accounting for Investments).
Mar 31, 2011
Background
Marksans Pharma Ltd. (The Company) together with its subsidiaries and
associates, operate as an integrated international pharmaceutical
organisation with business encompassing the entire value change in the
marketing, production and distribution of pharmaceutical products.
The company's shares are listed for trading on the National Stock
Exchange and the Bombay Stock Exchange in India.
Contingent Liabilities
(Rs. In Lacs)
31st March, 31st March,
2011 2010
(a) In respect of Letters of Credit 1558.83 178.17
& Bank Guarantees issued by the
Company's Bankers :
(b) In respect of Material - Nil
(c) Foreign Exchange Fluctuation
on FCCB - 2164.80
(d) Sales Tax (BST,CST) Ã 03-04 11.51 -
(e) Sales Tax (BST,CST) Ã 04-05 7.62 -
(3) (a) The current outstanding of principal value of Foreign Currency
Convertible Bonds of USD 43,999,000 (Rs. 19949.85 Lacs) have become due
for redemption on 9th November, 2010 and were not redeemed. These Bonds
have redemption premium of USD 19.89 Mn. (Rs. 9017.33 Lacs). The
Company was in constructive conversations with the Bond holders for the
restructuring of the Bonds. However, as on 31st March, 2011 the same
has not yielded any results. Therefore, the Company is in default in
the Bond redemption. The Company has provided for these liabilities in
its books of accounts along with exchange loss of Rs. 2363.45 Lacs.
Further, due to the redemption default, there will be a default
interest payable at 8% p.a. from the due date of redemption which has
not yet been provided(Rs.620.90 Lacs).
(b) Due to the losses incurred by the company for the year ended 31st
March, 2011, the Net Worth of the Company as on 31st March, 2011 has
been completely eroded. Therefore, the Directors have formed an opinion
that the Company has become a Sick Industrial Company within the
meaning of Section 3(1)(o) of the Sick Industrial Companies (Special
Provisions) Act, 1985 and it is mandatory under the provisions of the
said Act to make a reference to the Board for Industrial and Financial
Reconstruction for determining measures that will be adopted with
respect to the Company. Under the circumstances, the Directors will
make a reference to the Board for Industrial and Financial
Reconstruction within the stipulated time after the accounts are
adopted by the shareholders in the forthcoming AGM.
(4) Foreign Exchange Transactions
As required by Accounting Standard 11 "the effect of changes in the
foreign exchange rates" during the year the company has restated its
assets & liabilities at the closing exchange rate prevailing at the
Balance Sheet date.
(5) Accounting for investment
The long term investments made by the Company are stated at cost which
includes investment made in the Subsidiaries. The current investments
are valued at lower of cost or market value.
(6) Accounting for Employee benefits
Liabilities for gratuity & other retirement benefits are accounted on
accrual basis.
All the other borrowing costs are recognized as expenses in the period
in which they are incurred.
(7) Segment Reporting as per AS 17
BUSINESS SEGMENTS
The Company is primarily engaged in a single business segment of
manufacturing and marketing of Pharmaceutical Formulations and Active
Pharmaceutical Ingredients and is managed as one entity, for its
various activities and is governed by a similar set of risks and
returns.
(8) Related Party Disclosures
(b) Parties where control exists
Subsidiary companies
Nova Pharmaceuticals Australasia Pty Ltd
Marksans Pharma (UK) Limited
(c) Related party relationships where transaction have taken place
during the year
Subsidiary Companies
Nova Pharmaceuticals Australasia Pty Ltd
Marksans Pharma (UK) Limited
(9) Accounting for Leases
Assets acquired under finance leases are recognised at the lower of the
fair value of the leased assets at inception and the present value of
minimum lease payments. Lease payments are apportioned between the
finance charge and the outstanding liability. The finance charge is
allocated to periods during the lease term at a constant periodic rate
of interest on the remaining balance of the liability.
Lease rentals in respect of assets taken under operating leases are
charged to Profit and Loss Account on a straight line basis over the
lease term.
The Company has taken various residential and commercial premises on
cancelable operating lease or leave & license agreement .The lease
agreement which are non cancelable are for period of three years. The
rental expenses of such cancelable operating lease are recognized as
rent expenses in the Profit and Loss Account.
The Leasing arrangements, which are cancelable range between 11 months
and 3 years, are usually renewable by mutual consent on mutually
agreeable terms. Under these arrangements, generally interest free
deposits have been given.
10) Earnings per share.
As per Accounting standard 20 "Earnings Per Share" issued by ICAI,
basic earnings per share is calculated by dividing the net profit for
the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the year.
(11) DEFERRED TAX LIABILITY / (ASSET) :
As per Accounting standard 22 "Accounting for taxes on income" issued
by ICAI, deferred Income taxes are recognized for the future tax
consequence attributable to timing differences between the financial
statement determination of income and their recognition for tax
purposes. The effect on deferred tax assets and liabilities because of
a change in tax rates is recognized in the Statement of Profit and Loss
using the tax rates and tax laws that have been enacted or
substantively enacted as on the Balance Sheet date.
Deferred tax assets 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.
(12) Impairment of Assets
The company identifies impairable assets at the year end in terms of
cash generating unit concept based on para-5 to 13 of AS-28 issued by
ICAI for the purpose of arriving at impairment loss thereon being the
difference between the book value and recoverable value of relevant
assets. Impairment loss, if any, when crystallizes is charged against
revenue of the year.
During the year under review there are no impaired assets requiring
recognition of impairment loss as per Accounting Standard 28"Impairment
of Assets" issued by the Institute of Chartered Accountants of India.
(16) Security for Loans in Schedule 3 :
(1) Term Loans & Cash Credit from Banks : Secured by mortgage on
pari-passu charge basis of the Company's all immovable assets, Present
and future, situated at L-82,L-83 Verna(Goa), and Hypothecation of
plant and machinery situated at the Company's Manufacturing facilities.
Cash Credit from Banks are secured against hypothecation of current
assets viz; stock of raw material, packing material, work in progress,
receivables.]
(2) Vehicle Loans: Secured by hypothecation of respective vehicle.
(17) The Company has no information as to whether any of its suppliers
constitute small scale undertakings and therefore, the amount due to
such suppliers has not been identified.
(18) Additional information pursuant to the provisions of paragraphs 3,
4C, 4D of Part II of Schedule VI to the Companies Act, 1956 (figures in
brackets relates to the previous year)
(19) Figures of the previous year have been regrouped and re-arranged
wherever necessary, so as to make them comparable with the current
figures.
Mar 31, 2010
(1) PROVISIONS,CONTINGENT LIABILITIES & CONTINGENT ASSETS
Provisions are recognized for liabilities that can be measured only by
using a substantial degree of estimation, if
a. the Company has a present obligation as a result of past event,
b. a probable outflow of resources is expected to settle the
obligation; and
c. the amount of the obligation can be reliably estimated.
Contingent liability is not recognized but disclosed in the notes to
the Accounts.
The Contingent Assets are neither recognized, nor disclosed.
Provisions, Contingent Liabilities and Contingent Assets are reviewed
at each Balance Sheet date.
Contingent Liabilities
(Rs.In Lacs)
31st March,
2010 31st March,
2009
(a) In respect of Letters of Credit &
Bank Guarantees issued by the
Companys Bankers : 178.17 297.89
(b) Disputed Taxes/Dues(See note 3 below) 250 Nil
(c) In respect of Material Nil 86.06
(d) Foreign Exchange Fluctuation on FCCB 2164.80 5335
(2) During the year, the Company received an assessment order from the
Income tax department for the A.Y.2002-03 to A.Y.2008-09 along with the
demand of Rs.450Lacs. The company has gone in to appeal before the
Commissioner of Income Tax(Appeals) against the said assessment order
after making tax payment of Rs.200 lacs under protest. The hearing of
appeal for the A.Y.2002-03 to A.Y2008-09 before the Commissioner of
Income Tax (Appeals) is underway. The appeal order is expected soon we
are expecting substantial tax relief hence no additional tax liability
is expected thereof, therefore no provision has been made in the books
of accounts but shown as contingent liability of Rs.250 Crore.
3) CONTINGENCIES AND EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
1. The Company has issued and allotted 1333 equity shares of Re.1 each
on conversion of FCCB of US$1000 on 14.04.2010.Accordingly the Issued
,Subscribed and Paid up equity share capital of the company has
increased from Rs.367805871/- to Rs.367807204/- effective from
14.04.2010.
2. The Company has on 28th July,2010 entered into a Business Transfer
Agreement with Kores (India) Limited for sale and transfer of its
Active Pharmaceutical Ingredients (API) business together with its
manufacturing facilities located at Plot Nos. A-88 & D-10, MIDC,
Kurkum, Pune, Maharashtra.
4) FOREIGN EXCHANGE TRANSACTIONS
As required by Accounting Standard 11 "the effect of changes in the
foreign exchange rates" during the year the company has restated its
assets & liabilities at the closing exchange rate prevailing at the
Balance Sheet date except towards Foreign Exchange Difference of
Rs.2164.80 Lakh in case of Foreign Currency Convertible Bond, the
Management is of the opinion the determination and Crystallization of
Liabilities is dependent upon the outcome of uncertain future events or
actions not wholly within the control of the Company and therefore the
same has been considered as ÃContingent Liability as on 31.3.2010 and
Due to this profit for the year ended 31.3.2010 is overstated.
5) ACCOUNTING FOR INVESTMENT
The long term investments made by the Company are stated at cost which
includes investment made in the Subsidiaries.
The current investments are valued at lower of cost or market value.
The current investment made by the Company includes investment made in
the SBI Premier Liquid Fund for Rs.10.00 Crores.
6) ACCOUNTING FOR EMPLOYEE BENEFITS
Liabilities for gratuity & other retirement benefits are accounted on
payment basis which is in non conformity with Accounting Standard 15
"Employee Benefits" issued by The Institute of Chartered Accountants of
India which requires accounting for same on accrual basis as per
actuarial valuation
All the other borrowing costs are recognized as expenses in the period
in which they are incurred.
The Company has incurred borrowing costs on Term Loan & Overdraft
facility taken in the Previous Years but not against
any Qualifying Fixed Assets. During the current year Company has not
borrowed any funds for the acquisition of the Qualifying Fixed Assets
therefore Accounting Standard 16 for accounting of borrowing costs
issued by the Institute of Chartered Accountants of India is not
applicable to the company.
7) SEGMENT REPORTING AS PER AS 17
BUSINESS SEGMENTS
The Company is primarily engaged in a single segment business of
manufacturing and marketing of Pharmaceutical formulations and Active
Pharmaceutical ingredients and is managed as one entity, for its
various activities and its governed by a similar set of risks and
returns.
8) RELATED PARTY DISCLOSURES
As required by Accounting Standard 18 "Related Parties Disclosure"
issued by The Institute of Chartered Accountants of India, list of
parties with whom transactions have taken place during the year are as
follows:
b) Parties where control exists
Subsidiary companies
Nova Pharmaceuticals Australasia Pty Ltd
Marksans Pharma (UK) Limited
c) Related party relationships where transaction have taken place
during the year
Subsidiary Companies
Nova Pharmaceuticals Australasia Pty Ltd
Marksans Pharma (UK) Limited
9) ACCOUNTING FOR LEASES
Assets acquired under finance leases are recognised at the lower of the
fair value of the leased assets at inception and the present value of
minimum lease payments. Lease payments are apportioned between the
finance charge and the outstanding liability. The finance charge is
allocated to periods during the lease term at a constant periodic rate
of interest on the remaining balance of the liability.
Lease rentals in respect of assets taken under operating leases are
charged to profit and loss account on a straight line basis over the
lease term.
The Company has taken various residential and commercial premises on
cancelable operating lease or leave & license agreement .The lease
agreement which are non cancelable are for period of three years. The
rental expenses of such cancelable operating lease are recognized as
rent expenses in the Profit and Loss Account.
10) EARNINGS PER SHARE
As per Accounting standard 20 "Earnings per share" issued by ICAI Basic
earnings per share is calculated by dividing the net profit for the
year attributable to equity shareholders by the weighted average number
of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the weighted
average numbers of shares outstanding are adjusted for the effects of
all dilutive potential equity shares from the exercise of options on
unissued share capital and on conversion of FCC Bonds. The calculations
of earnings per share (basic and diluted) are based on the earnings and
number of shares as computed below.
11) DEFERRED TAX LIABILITY / (ASSET) :
As per Accounting standard 22 "Accounting for taxes on income" issued
by ICAI, deferred Income taxes are recognized for the future tax
consequence attributable to timing differences between the financial
statement determination of income and their recognition for tax
purposes. The effect on deferred tax assets and liabilities because of
a change in tax rates is recognized in the Statement of Profit and Loss
using the tax rates and tax laws that have been enacted or
substantively enacted by the Balance Sheet date.
Deferred tax assets 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 major elements of deferred tax liability / (asset) are as under:
12) IMPAIRMENT OF ASSETS
The company identifies impairable assets at the year end in terms of
cash generating unit concept based on para-5 to 13 of AS-28 issued by
ICAI for the purpose of arriving at impairment loss thereon being the
difference between the book value and recoverable value of relevant
assets. Impairment loss, if any, when crystallizes is charged against
revenue of the year.
During the year under review there are no impaired assets requiring
recognition of impairment loss as per Accounting Standard 28"Impairment
of Assets" issued by the Institute of Chartered Accountants of India.
13 SECURITY FOR LOANS IN SCHEDULE 3 :
1] Term Loans: Secured by Mortgage on pari-passu charge basis of the
Companys all Immovable assets, Present and future, situated at
L-82,L-83 Verna(Goa), Plot D-10 and A-88, MIDC Kurkumbh, Tal. Daund,
Dist. Pune, and Hypothecation of Plant and machinery situated at the
Companys all three Manufacturing facilities.
2] Cash Credit from Banks: Secured against hypothecation of Current
assets viz; stock of raw material, packing material, work in progress,
receivables.
3] Vehicle Loans: Secured by Hypothecation of respective vehicle.
14 The Company has no information as to whether any of its suppliers
constitute small scale undertakings and therefore the amount due to
such suppliers has not been identified.
15 Additional information pursuant to the provisions of paragraphs 3,
4C, 4D of Part II of Schedule VI to the Companies Act, 1956 (figures in
brackets relates to the previous year)
a) Licensed capacity, installed capacity and production (as certified
by the management and not verified by auditors, it being technical
matter)
16 Figures of the previous year have been regrouped and re-arranged
wherever necessary, so as to make them comparable with the current
years figures.