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Notes to Accounts of Morepen Laboratories Ltd.

Mar 31, 2015

1. Rights, preferences and restrictions attached to each class of Shares and terms of redemption -

a) i) The company has two classes of shares referred as equity shares and preference shares. The equity shares are having a

par value of Rs. 2/- each whereas par value for each preference shares is Rs. 100/-. Every holder of equity shares is entitled to one vote per share in respect of all matters submitted to vote in the shareholders' meeting. Preference share holders are entitled to one vote per share, in respect of every resolutions placed before the company which directly affect the rights attached to their shares. However, a preference shareholder acquires voting rights at par with an equity shareholder if the dividend on preference shares has remained unpaid for a period of not less than two years.

ii) In the event of liquidation of the company, the holders of equity shares will be entitled to receive the remaining assets of the company after distribution of preferential amounts. The distribution will be in the proportion of the number of equity shares held by the shareholders.

iii) 1 7,30,000, 0.01% Redeemable Preference Shares of Rs. 100/- each and 5,00,000, 9.75% Redeembale Preference Shares of Rs. 100/- each are cummulative. Dividend arrears on these shares as at 31.03.2015 are Rs. 635 Lacs (Previous year Rs. 586 Lacs).

b) i) All 97,35,201, 0.01% Optionally Convertible Preference Shares, Shares having fallen due for redemption/conversion during the year, could not be redeemed because of unavailability of surplus. The conversion, if opted for, of preference shares into equity shares will be at price determined as per SEBI guidelines. Dividend arrears on above preference shares as at 31.03.2015 are Rs. 8 Lacs (Previous year Rs. 7 Lacs).

ii) Out of 1 7,30,000, 0.01 % Cummulative Reedemable Preference Shares, 15,30,000 Shares amounting Rs.1530 Lacs are redeemable in two equal installments, on May 4, 2016 & May 4, 201 7. Balance 2,00,000, Shares amounting Rs. 200 lacs, had already become due for redemption in the financial year ending 31.03.2012, could not be redeemed because of unavailability of surplus.

iii) 5,00,000, 9.75% Cumulative redeemable Preference shares amounting to Rs. 500 Lacs had been due for redemption since March 2004, however, could not be redeemed because of unavailability of surplus. The subscriber has filed a legal case against the company for the recovery of the sum invested as well as interest thereon. The company has contested the claim of the subscriber and have moved the jurisdictional appellant authorities against the said claim.

iv) Capital Redemption Reserve for redemption of Preference Shares could not be created during the year because of unavailability of surplus.

2. The company itself being ultimate holding company, therefore, disclosure requirements about its parent company are not applicable in the present case.

3. During last 5 years immediately preeceding the balance sheet date, no Equity Share or Preference share has been issued pursuant to any contract without payment being received in cash. Further the company has neither allotted any share by way of bonus shares, nor it had bought back any Equity or Preference Share during aforesaid period of 5 years.

4. Term Loans from Banks & Institutions

A. Term loans, except noted at (d) below, are secured by a first charge created by way of a joint equitable mortgage on pari - passu basis on all immovable and movable fixed assets, including plant and machinery, land & buildings and others, both present and future, first charge over Escrow/Trust and Retention Account, and second charge on the current assets of the company, both present and future. Further these loans are secured by personal guarantee of Managing Director of the company.

5. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

a) Contingent Liabilties

Claim against the Company not 1166 1144 acknowledged as debts

Guarantees 27 9

Other money for which company is 1131 1477 contingently liable

Arrears of Fixed Cummulative Dividends 643 593 on Preference Shares

Bills discounted with banks 309 126

3276 3349

b) Commitments - -

3276 3349

6. PRIOR PERIOD ITEMS

Expenses include Rs. 11 lacs (Previous Year Rs. 195 lacs) as expenses (net) relating to earlier years.

7. SEGMENT REPORTING

In accordance with AS-17 "Segment Reporting", segment information has been given in consolidated financial statements of the company, and therefore, no seperate disclosure on segment information is given in these financial statements.

8. RELATED PARTY DISCLOSURES

Disclosure as required by accounting standard "Related Party Disclosures" (AS-18) issued by the Institute of Chartered Accountants of India are as under:

9. Related Parties

1 Subsidiary Companies MorepenMax Inc. Morepen Inc. Dr. Morepen Limited Total Care Limited

Overseas Company Overseas Company Domestic Company Domestic Company

2. Associates Morepen Biotech Limited (up to 30.09.2014)

Domestic Company

3. Key Management Personnel

Mr. Sushil Suri, Chairman & Managing Director Dr. A.K. Sinha, Whole Time Directors Mr. Ajay Sharma, Chief Financial Officer Mr. Thomas Joshua,Company Secretary

4. Relatives of Key Management personnnels with whom the company has any transaction during the year

Ms. Amita Sharma Mr. Sanjay Suri

5. Entities over which key management personnel/ or Relatives of key management personnel are able to exercise significant influence with which the company has any transactions during the year

Not Any

10. IMPAIRMENT

It is the view of management that there are no impairment conditions that exist as on 31st March, 2015. Hence, no provision is required in the accounts for the year under review.

11. DEFERRED TAX LIABILITY/ (ASSET)

As required by Accounting Standard "Accounting for taxes on income" i.e. (AS-22) issued by the Institute of Chartered Accountants of India, deferred tax asset on losses during the year, is not recognized as a matter of prudence.

12. OTHERS SIGNIFICANT DISCLOSURES

a) In the opinion of directors, all assets and non-current investments stated otherwise have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the books of accounts and the provision for depreciation and for all known liabilities is adequate and considered reasonable.

b) With a view to increase its visibility in the promising FMHG/OTC business and reap the potential benefits in the above business streams, with added advantages of better brand building, customer confidence and better product quality, the company has decided to acquire/buyout new brands, expand the existing brands and product portfolio, a sum of Rs. 3393 Lacs has been advanced to Dr. Morepen Limited, its wholly owned subsidiary for the same.

c) Balances of Non-current liabilities, Current liabilties, Long terms loans and advances, Trade receivables, Short term loans and advances and banks are subject to confirmation.

d) Sales Tax assessments for earlier years are in progress. Demand, if any, shall be known & accounted for, on the completion of assessments.

e) During the financial year ending 31st March 2010, the company had allotted, 9,24,90,413 Equity Shares to fixed deposit holders towards settlement of their dues, under the Scheme of arrangement or compromise u/s 391 of the Companies Act, 1956, approved by Hon'ble High Court at Shimla. The central government preferred an appeal against the said order before Division of the High Court which was allowed. While setting aside the impugned order, matter was remanded back to the single judge for considering the representation of Central Government & deciding the petition afresh after hearing all the parties. The matter is pending for adjudication before single judge of Hon'ble Himachal Pradesh High Court.

f) Remuneration paid to directors' for the period April 2005 - March 2014 amounting to Rs. 356 lacs is subject to central government approval.

g) Previous year figures have been regrouped and rearranged wherever necessary to suit the present year layout.

h) Figures have been rounded off to the nearest lacs.




Mar 31, 2014

1. Rights, preferences and restrictions attached to each class of Shares and terms of redemption -

a) i) The company has two classes of shares referred as equity shares and preference shares. The equity shares are having a par value of Rs. 2/- each whereas par value for each preference shares is Rs. 100/-. Every holder of equity shares is entitled to one vote per share in respect of all matters submitted to vote in the shareholders'' meeting. Preference share holders are entitled to one vote per share, in respect of every resolution placed before the company which directly affect the rights attached to their shares. However, a cumulative preference shareholder acquires voting rights at par with an equity shareholder if the dividend on preference shares has remained unpaid for a period of not less than two years.

ii) In the event of liquidation of the company, the holders of equity shares will be entitled to receive the remaining assets of the company after distribution of preferential amounts. The distribution will be in the proportion of the number of equity shares held by the shareholders.

iii) 17,30,000, 0.01% Redeemable Preference Shares of Rs. 100/- each and 5,00,000, 9.75% Redeembale Preference Shares of Rs. 100/- each are cummulative. Dividend arrears on these shares as at 31.03.2014 are Rs. 586 Lacs (Previous year Rs. 537 Lacs).

b) i) Out of 97,35,201, 0.01% Optionally Convertible Preference Shares, Shares amounting to Rs. 7,040 Lacs fall due for redemption/conversion on May 4, 2014, shares amounting to Rs. 1,762 Lacs are due for redemption on May 31, 2014 whereas balance shares amounting to Rs. 933 Lacs are due for redemption/conversion on February 9, 2015. The conversion, if opted for, of preference shares into equity shares will be at price determined as per SEBI guidelines. Dividend arrears on above preference shares as at 31.03.2014 are Rs. 7 Lacs (Previous year Rs. 6 Lacs).

ii) Out of 1 7,30,000, 0.01% Cummulative Reedemable Preference Shares, 15,30,000 Shares amounting Rs. 1,530 Lacs are redeemable in two equal installments, on May 4, 2016 & May 4, 2017. Balance 2,00,000, Shares amounting Rs. 200 lacs, had already become due for redemption in the financial year ending 31.03.2012, could not be redeemed because of unavailability of surplus.

iii) 5,00,000, 9.75% Cumulative redeemable Preference shares amounting to Rs. 500 Lacs had been due for redemption since March, 2004, however, could not be redeemed because of unavailability of surplus. The subscriber has filed a legal case against the company for the recovery of the sum invested as well as interest thereon. The company has contested the claim of the subscriber and have moved the jurisdictional appellant authorities against the said claim.

iv) Capital Redemption Reserve for redemption of Preference Shares could not be created during the year because of unavailability of surplus.

2. The company itself being ultimate holding company, therefore, disclosure requirements about its parent company are not applicable in the present case.

3. During last 5 years immediately preeceding the balance sheet date, no Equity Share or Preference share has been issued pursuant to any contract without payment being received in cash. Further the company has neither allotted any share by way of bonus shares, nor it had bought back any Equity or Preference Share during aforesaid period of 5 years.

4. Term Loans from Banks & Institutions

a. Term loans, except noted at (d) below, are secured by a first charge created by way of a joint equitable mortgage on pari-passu basis on all immovable and movable fixed assets, including plant and machinery, land & buildings and others, both present and future, first charge over Escrow/Trust and Retention Account, and second charge on the current assets of the company, both present and future. Further these loans are secured by personal guarantee of Managing Director of the company.

5. Unsecured Loans

During the year, the company has repaid the outstanding loan amounting to Rs. 1,074 Lacs (Previous Year Rs. 430 Lacs)

6. Current portion of long term borrowings is appearing under the head Other current liabilities. (Refer Note No. 9)

7. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

a) Contingent Liabilties

Claim against the Company not acknowledged as debts 1144 1525

Guarantees 9 14

Other money for which company is contingently liable 1477 1274

Arrears of Fixed Cummulative Dividends on Preference 593 543 Shares

Bills discounted with banks 126 134

3349 3490

b) Commitments - -

3349 3490

8. Extraordinary items of Rs. 290 Lacs (Previous year 308 Lacs) represent net of surplus of Rs. 677 Lacs accruing on account of settlement with one of the lenders of the Company and amount of Rs. 387 Lacs provided towards fall in carrying value of investment in the associate company.

9. PRIOR PERIOD ITEMS

Expenses include Rs.195 lacs (Previous Year Rs. 110 lacs) as expenses (net) relating to earlier years.

10. SEGMENT REPORTING

In accordance with AS-17 "Segment Reporting", segment information has been given in consolidated financial statements of the company and therefore, no seperate disclosure on segment information is given in these financial statements.

11. RELATED PARTY DISCLOSURES

Disclosure as required by accounting standard "Related Party Disclosures" (AS-18) issued by the Institute of Chartered Accountants of India are as under:

12. IMPAIRMENT

It is the view of management that there are no impairment conditions that exist as on 31st March, 2014. Hence, no provision is required in the accounts for the year under review.

13. DEFERRED TAX LIABILITY/ (ASSET)

As required by Accounting Standard "Accounting for taxes on income" i.e. (AS-22) issued by the Institute of Chartered Accountants of India, deferred tax asset on losses during the year, is not recognized as a matter of prudence.

14. OTHERS SIGNIFICANT DISCLOSURES

a) In the opinion of directors, all assets and non-current investments stated otherwise have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the books of accounts and the provision for depreciation and for all known liabilities is adequate and considered reasonable.

b) Balances of Non-current liabilities, Current liabilties, Long terms loans and advances, Trade receivables, Short term loans and advances and banks are subject to confirmation.

c) Sales Tax assessments for earlier years are in progress. Demand, if any, shall be known & accounted for, on the completion of assessments.

d) During the financial year ending 31st March, 2010, the company had allotted, 9,24,90,413 Equity Shares to fixed deposit holders towards settlement of their dues, under the Scheme of arrangement or compromise u/s 391 of the Companies Act, 1956, approved by Hon''ble High Court at Shimla. The central government preferred an appeal against the said order and the Hon''ble Divisional Bench while admitting the appeal directed the implementation of the Scheme subject to the final outcome of the Appeal. The matter has now been remanded back to the single judge of Hon''ble Himachal Pradesh High Court for giving Central Government a hearing and adjudicating the matter.

e) Remuneration paid to directors'' for the period April, 2005 - March, 2014 of Rs. 356 lacs, including current year remuneration of Rs. 52 lacs is subject to approval from Central Government.

f) In view of losses during the year, the managing director has been paid a salary of Rs. 24 lacs, out of approved salary of Rs. 60 lacs. Balance salary of Rs. 36 lacs has been forgone by him and hence not provided in the accounts.

g) Taxation - No Provision for current Income tax has been made in view of loss during the year.

h) Previous year figures have been regrouped and rearranged wherever necessary to suit the present year layout.

i) Figures have been rounded off to the nearest lacs.


Mar 31, 2013

(Rs. in Lacs)

As at As at 31.03.2013 31.03.2012

1. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

a) Contingent Liabilities

Claim against the Company not acknowledged as debts 1525 459

Guarantees 14 4

Other money for which company is contingently liable 1274 120

Arrears of Fixed Cummulative Dividends on Preference Shares 543 493

Bills discounted with banks 134 229

3490 1305

b) Commitments

3490 1305

2. PRIOR PERIOD ITEMS

Expenses include Rs. 110 lacs (Previous Year Rs. 6 lacs) as expenses (net) relating to earlier years.

3. SEGMENT REPORTING

In accordance with AS-17 "Segment Reporting", segment information has been given in consolidated financial statements of the company, and therefore, no seperate disclosure on segment information is given in these financial statements.

4. RELATED PARTY DISCLOSURES

Disclosure as required by accounting standard "Related Party Disclosures" (AS-18) issued by the Institute of Chartered Accountants of India are as under:

Related Parties

1 Subsidiary Companies

MorepenMax Inc. Overseas Company

Morepen Inc. Overseas Company

Dr. Morepen Limited Domestic Company

Total Care Limited Domestic Company

2. Associates

Morepen Biotech Limited Domestic Company

3. Key Management Personnel Mr. Sushil Suri, Chairman & Managing Director (Whole Time Directors) Dr. A.K. Sinha

4. Relatives of key Management personnels with whom the company has any transaction during the year

Nil

5. Entities over which key management personnel/ or Relatives of key management personnel are able to exercise significant influence with which the company has any transactions during the year

Blue Coast Infrastructure Development Private Limited

5. IMPAIRMENT

It is the view of management that there are no impairment conditions that exist as on 31st March, 2013. Hence, no provision is required in the accounts for the year under review.

6. DEFERRED TAX LIABILITY/ (ASSET)

As required by Accounting Standard "Accounting for taxes on income" i.e. (AS-22) issued by the Institute of Chartered Accountants of India, deferred tax asset on losses during the year, is not recognized as a matter of prudence.

7. OTHERS SIGNIFICANT DISCLOSURES

a) In the opinion of directors, all assets and non-current investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the books of accounts and the provision for depreciation and for all known liabilities is adequate and considered reasonable.

b) Balances of Non-current liabilities, Current liabilties, Long terms loans and advances, Trade receivables, Short term loans and advances and banks are subject to confirmation.

c) The application for compounding of offences for violation of various provisions of the Companies Act, 1956 as pointed out in the inspection report, in respect of inspection carried out under section 209A of the said Act, is pending with the Central Govt.

d) During the financial year ending 31st March 2010, the company had allotted, 9,24,90,413 Equity Shares to fixed deposit holders towards settlement of their dues, under the Scheme of arrangement or compromise u/s 391 of the Companies Act, 1956, approved by Hon''ble High Court at Shimla. The central government preferred an appeal against the said order and the Hon''ble Divisional Bench while admitting the appeal directed the implementation of the Scheme subject to the final outcome of the Appeal. The matter has now been remanded back to the single judge of Hon''ble Himachal Pradesh High Court for giving Central Government a hearing and adjudicating the matter.

e) Remuneration paid to directors'' for the period April 2005 - March 2013, of Rs. 304 lacs, including current year remuneration of Rs. 50 lacs is subject to approval from Central Government.

f) In view of losses during the year, the managing director has been paid a salary of Rs. 24 lacs, out of approved salary of Rs. 60 lacs. Balance salary of Rs. 36 lacs has been forgone by him and hence not provided in the accounts.

g) Taxation - No Provision for current Income tax has been made in view of loss during the year.

h) Sales Tax assessments for earlier years are in progress. Demand, if any, shall be accounted for, on the completion of assessments.

i) Previous year figures have been regrouped and rearranged wherever necessary to suit the present year layout.

j) Figures have been rounded off to the nearest lacs.


Mar 31, 2012

A. Rights, preferences and restrictions attached to each class of Shares and terms of redemption -

a) i) The company has mainly two classes of shares referred as equity shares and preference shares. The equity shares are having a par value of Rs. 2/- each whereas par value for each preference shares is Rs. 100/-. Every holder of equity shares is entitled to one vote per share in respect of all matters submitted to vote in the shareholders' meeting. Preference share holders are entitled to one vote per share, in respect of every resolutions placed before the company which directly affect the rights attached to their shares.

ii) In the event of liquidation of the company, the holders of equity shares will be entitled to receive the remaining assets of the company after distribution of preferential amounts. The distribution will be in the proportion of the number of equity shares held by the shareholders.

iii) Preference share capital is non - Cumulative, except in the case of 5,00,000, 9.75% Preference Shares of Rs. 100/- each. Dividend arrears on above cumulative preference shares as at 31.03.2012 are Rs. 488 Lacs.

b) i) Out of 97,35,201, 0.01% Optionally Convertible Preference Shares, amounting to Rs. 7040 Lacs are due for redemption/conversion on May 4, 2014, shares amounting to Rs. 1762 Lacs are due for redemption on May 31, 2014 whereas balance shares amounting to Rs. 933 Lacs are due for redemption/conversion on February 9, 2015. The conversion, if opted for, of preference shares into equity shares will be at price determined as per SEBI guidelines.

ii) Out of 17,30,000, 0.01% Cummulative Reedemable Preference Shares, 15,30,000 Shares amounting Rs.1530 Lacs are redeemable in two equal installments, on May 4, 2016 & May 4, 2017. Balance 2,00,000, Shares amounting Rs. 200 lacs, due for redemption in the current year, could not be redeemed because of unavailability of surplus.

iii) 5,00,000, 9.75% Cumulative redeemable Preference shares amounting to Rs. 500.00 Lacs had been due for redemption since March 13, 2004, however, could not be redeemed because of unavailability of surplus.

A. The company itself being ultimate holding company, therefore, disclosure requirements about its parent company are not applicable in the present case.

B. During last 5 years immediately preeceding the balance sheet date, no Equity Share or Preference share has been issued pursuant to any contract without payment being received in cash. Further the company has neither allotted any share by way of bonus shares, nor it had bought back any Equity or Preference Share during aforesaid period of 5 years.

Nature of Security and Terms of Repayment -

I. Term Loans from Banks

a. Term loans, except noted at (d) below, are secured by a first charge created by way of a joint equitable mortgage on pari -passu basis on all immovable and movable fixed assets, including plant and machinery, land & buildings and others, both present and future, first charge over Escrow/Trust and Retention Account, and second charge on the current assets of the company, both present and future. Further these loans are secured by personal guarantee of Managing Director of the company.

e. Debentures appearing under Note 8, Other Current Liabilities, amounting to Rs. 565 Lacs, along with interest, remuneration payable to trustees and other money due in respect thereof are secured by a first charge created jointly along with banks / financial institutions providing term loans. Surplus arising out of settlement of these debentures, being under negotiation, as per the approved CDR scheme, shall be accounted for at the time of final payout.

II. Unsecured Loans

Loans from related parties are due for repayment in the year 2013-14 and carry interest @ 21% per annum for the years 2012-13 & 2013-14.



1. CONTINGENT LIABILITIES AND COMMITMENTS (Rs. in Lacs) (TO THE EXTENT NOT PROVIDED FOR) As at As at a) Contingent Liabilties 31.03.2012 31.03.2011

Claim against the Company not acknowledged as 459 343 debts

Guarantees 4 145

Other money for which company is contingently 120 - liable

Bills discounted with banks 229 -

812 488

b) Commitments - -

812 488

2. Extraordinary items of Rs. 1204 Lacs (Previous year Nil) represent surplus accruing on account of settlement of long term borrowing of the company.

3. PRIOR PERIOD ITEMS

Expenses include Rs. 6 lacs (Previous Year Rs. 5 lacs) as expenses (net) relating to earlier years.

4. SEGMENT REPORTING

In accordance with AS-17 "Segment Reporting", segment information has been given in consolidated financial statements of the company, and therefore, no separate disclosure on segment information is given in these financial statements.

5. IMPAIRMENT

It is the view of management that there are no impairment conditions that exist as on 31st March, 2012. Hence, no provision is required in the accounts for the year under review.

6. DEFERRED TAX LIABILITY/ (ASSET)

As required by Accounting Standard "Accounting for taxes on income" i.e. (AS-22) issued by the Institute of Chartered Accountants of India, deferred tax asset on losses during the year, is not recognized as a matter of prudence.

7. OTHERS SIGNIFICANT DISCLOSURES

a) In the opinion of directors, all other assets other than fixed assets and non-current investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the books of accounts and the provision for depreciation and for all known liabilities is adequate and considered reasonable.

b) Balances of Non-current liabilities, Current liabilties, Long terms loans and advances, Trade receivables, Short term loans and advances are subject to confirmation.

c) The application for compounding of offences for violation of various provisions of the Companies Act, 1956 as pointed out in the report of inspection conducted under section 209A of the said Act is, pending with the Central Govt.

d) During the financial year ending 31st March 2010, the company had allotted, 9,24,90,413 Equity Shares to fixed deposit holders towards settlement of their dues, under the Scheme of arrangement or compromise u/s 391 of the Companies Act, 1956, approved by Hon'ble High Court at Shimla. The central government preferred an appeal against the said order and the Hon'ble Divisional Bench while admitting the appeal directed the implementation of the Scheme subject to the final outcome of the Appeal. The matter has now been remanded back to the single judge of Hon'ble Himachal Pradesh High Court for giving central government a hearing and adjudicating the matter.

e) Remuneration paid to directors' for the period April 2005 - March 2012, of Rs. 254 lacs, including current year remuneration of Rs. 53 lacs is subject to approval from Central Govt.

f) In view of losses during the year, the managing director has been paid a salary of Rs. 29 lacs, out of approved salary of Rs. 60 lacs. Balance salary of Rs. 31 lacs has been forgone by him and hence not provided in the accounts.

g) Taxation

No Provision for current Income tax has been made in view of loss during the year.

h) Sales Tax assessments for earlier years are in progress. Demand, if any, shall be accounted for, on the completion of assessments.

i) Previous year figures have been regrouped and rearranged wherever necessary to suit the present year layout.

j) Figures have been rounded off to the nearest lacs.


Mar 31, 2010

I BALANCE SHEET

1. Share Capital

1.1 Equity Share Capital

During the year, the company has allotted 9, 24, 90,413 Equity Shares of Rs. 2/-each fully paid up at a price of Rs. 11.32 per share, determined under SEBI (DIP) guidelines, to the fixed deposit holders of the company towards full and final settlement of their dues, pursuant to order passed by Honble High Court ofHimachal Pradesh atShimla approving the scheme of arrangement and compromise with fixed deposit holders.

1.2 Preference Share Capital

1,19,65,201 Preference Shares of Rs. 100/-each consist of-

- 97,35,201, 0.01% Optionally Convertible Preference Shares, amounting to Rs. 9735.20 Lacs are due for redemption/conversion in financial year 2014-15.

-15,30,000,0.01 % Preference Shares amounting Rs. 1530.00 Lacs are redeemable in two equal installments in the financial years 2016-1 7 and 201 7-18.

- 2,00,000,0.01 % Preference Shares amounting Rs. 200.00 lacs, aredue for redemption in the financial year 2011-12.

- 5,00,000, 9.75% Cumulative Redeemable Preference Shares amounting to Rs. 500.00 Lacs have already become due for redemption.

1.3 Naked Convertible Warrants

During the year, the company has forfeited the advance subscription amount of Rs. 270.40 Lacs received towards naked convertible warrants, on account of non-payment of balance 90% subscription money due on these warrants.

2. Reserves and Surplus

2.1 Addition to capital reserve of Rs. 270.40 Lacs, represents amount forfeited by the company, on account of non- payment within prescribed time period, of balance 90% subscription money due on the naked convertible warrants.

2.2 Addition to Securities Premium Account of Rs. 8620.11 Lacs represents premium on issue of 9,24,90,413 equity shares of Rs. 2/-each issued at a price of Rs. 11.32 per share issued to fixed deposit holders of the company towards full and final settlement of their dues.

2.3 Reduction of Rs. 357.42 lacs from Debenture Redemption Reserve represents reserve created in the earlier years and not required any longer in view of repayment/settlement of dues.

3. Secured Loans

3.1 Non Convertible Debentures of Rs.565.00 lacs (Previous Year Rs.565.00 lacs ) are privately placed and comprise of: 100,000 - 15% NCDs (Rs.33.33 paid up); 100,000- 18.5% NCDs (Rs.66.00 paid up);2,00,000 - 17 % NCDs (Rs.66.50 paid up); 200,000-19% NCDs (Rs. 33.33 paid up); 400,000-15.5% NCDs (Rs. 66.50 paid up).

All these debentures along with interest, remuneration payable to trustees and other money due in respect thereof are secured by a first charge created jointly along with banks / financial institutions providing term and corporate rupee loans except borrowings stated in Para 3.6 below.

3.2 Term Loans from financial institutions/banks of Rs.237.50 Lacs (Previous Year Rs.286.86 Lacs) represents balance amount payable in respect of settlements with these institutions/banks.

3.3 Interest bearing portion of restructured debts of Rs.6325.62 Lacs (Previous Year Rs.6781.01 Lacs) due to institutions/banks is payable starting from financial year 2010-11 and shall be fully payable by 31 st March, 2018.

3.4 Interest free portion of restructured debts of Rs.5559.76 Lacs (Previous Year Rs.5952.94 Lacs) due to institutions/banks shall be due for payment in the financial years starting 2016-1 7 and shall be fully payable by 31st March 2018. The debt will be interest bearing from the financial year 2015-16.

3.5 Non-convertible debentures/Term loans/restructured debts, are secured by a first charge created by way of joint equitable mortgage on pari - passu basis on all immovable and movable properties both present and future except borrowings stated in Para 3.6 below.

3.6 Other loans of Rs. 28.40 lacs (Previous year Rs.37.77 lacs) are secured by hypothecation of specific assets purchased under the hire purchase scheme.

4. Unsecured Loans

4.1 During the year, the scheme of arrangement and compromise with the fixed deposit holders filed by the company under section 391 of Companies Act, 1956, has been approved by the Honble High Court of Himachal Pradesh at Shimla. Pursuant to the approved scheme, the company has allotted Equity Shares of Rs. 21- each, at a price of Rs. 11.32 per share, determined under SEBI (DIP) Guidelines, to the fixed deposit holders equivalent to 75% of the principal amountdue. The balance 25% of the principal amount, as per the approved scheme, has been waived off and is shown as extraordinary items in the profit and loss account. As per the approved scheme, the interest on fixed deposits has been waived off.

4.2 Short term loans from others represent loans and inter corporate deposits from friends, relatives & others.

5. Current liabilities

Based on the information available with the Company, no amount is payable to Micro & Small Enterprises as defined under the MSMED Act, 2006. Further, no interest during the year has been paid or payable under the terms oftheMSMED Act, 2006.

6. Fixed Assets

6.1 During the year, the company has made addition to fixed assets of Rs. 438.79 lacs (Previous year Rs.163.02 lacs). Additions to fixed assets put to use have been capitalized. Depreciation on fixed assets is provided from the subsequent month after the asset is put to use. Fixed assets installed and put to use have been certified by the management.

6.2 Leasehold land is not amortised in view of para 1(c) of Accounting Standard on Leases (AS-19) issued by The Institute of Chartered Accountants of India defining scope of the standard.

7. Investments

The fall in value of investments, in unquoted shares and in respect of losses in subsidiary companies, has not been provided, as this, in view of managements perception, is temporary.

8. Inventories

The i nventory of stocks, stores and spares has been taken, valued and certified by the management.

9. Bank Balances

Bank balances of Rs. 28.52 lacs (Previous year Rs. 76.33 lacs) in deposit accounts are pledged as margin money.

10. Miscellaneous expenditure

The miscellaneous expenditure of Rs. 142.38 Lacs (Previous Year Rs. 139.38 lacs) includes Rs. 104.22 Lacs in respect of capital issue expenses remaining un-adjusted and Rs 38.16 lacs towards marketing expenses benefits of which are expected over a period of five years.

11. In the opinion of directors, the current assets, loans and advances are of the value stated except otherwise stated in the accounts, if realized in the ordinary course of business and the provision for depreciation and for all known liabilities is adequate and considered reasonable.

12. Balances of sundry creditors, secured and unsecured loans, sundry debtors, bank balances, loans and advances and security deposits are subject to confirmation.

13. During the year an amount of Rs. 11.24 Lacs was deposited in Investor Education and Protection Fund.

14. The application for compounding of various offences under provisions of the Companies Act, 1956 is pending with the Central Govt.



II. CONTINGENT LIABILITIES

(Rs. in lacs)

As at As at 31st March 2010 31st March 2009

Bank Guarantees 28.52 76.33

Pending settlement with banks/ institutions/Fixed Deposits- Nil 8004.48 Interest not provided

Accumulated dividend on preference shares 3.26 2.10

Claim againstthe Company not acknowledged as debt 338.51 359.98

Liability, if any, arising out of legal cases filed against Amount not Amount not the company by parties. ascertainable ascertainable



Note:-

a. The above remuneration paid to managerial persons is subject to approval from the Central Govt, under Section II (A) (ii) of Part II of Schedule XIII of the Companies Act, 1956. The remuneration paid is lower than minimum as allowed underthe Act.

b. Remuneration paid to directors during the years ending 31.03.2006 to 31.03.2009 amounting to Rs. 153.33 lacs is subject to approval from Central Govt.

c. In view of losses during the year, the managing director has been paid a salary of Rs. 12.75 lacs, out of approved salary of Rs. 60.20 lacs. Balance salary of Rs. 47.45 lacs has been forgone by him and hence not provided in the accounts.

2. Remuneration to auditors

3. Extraordinary items of Rs. 3385.77 Lacs represents liability waived off in respect of fixed deposit holders pursuant to approved scheme of compromise and arrangement with fixed deposit holders.

6. Taxation

No Provision for current Income tax has been made in view of loss during the year.

7. Expenses include Rs. 32.05 lacs (Previous Year Rs. 25.93 lacs) as expenses (net) relating to earlier years.

8. Sales Tax assessments for earlier years are in progress. Demand, if any, shall be accounted for, on the completion of assessments.

9. Dividend

No dividend is provided on equity/preference share capital in view of loss during the year.

10. Previous year figures have been regrouped and rearranged wherever necessary to suit the present year layout.

11. Segment Reporting

As the Companys business activity falls within a single primary business segment viz. "Pharmaceuticals" the disclosure requirements of Accounting Standards (AS-17) "Segment Reporting", issued by The Institute of Chartered Accountants of India are not applicable.

13. Deferred Tax Liability/ (Asset)

As required by Accounting Standard "Accounting for taxes on income" i.e. (AS-22) issued by the Institute of Chartered Accountants of India, deferred tax asset on losses during the year, is not recognized as a matter of prudence.

14. Impairment

It is the view of management that there are no impairment conditions that exist as on 31 st March, 2010. Hence, no provision is required in the accounts for the year under review.

15. Related party disclosures

Disclosure as required by accounting standard "Related Party Disclosures" (AS-18) issued by the institute of Chartered Accountants of India are given here under:

* Production of Drugs & Drug Intermediates is net of Captive Consumption of 21.452 MT (Previous Year 9.572 MT)

** Inclusive of free samples & free of cost quantity distributed i.e. 129.91 Nos/Lacs(Previous year 64.69 Nos/Lacs)

*** Inclusive of free of cost quantity i.e. 18922 Nos/Units(Previous year 7385 Nos/Units) (Quantitative details and installed capacity are as certified by management)

 
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