Mar 31, 2022
* The RP has confirmed that a public announcement was caused by the IRP regarding the initiation of corporate insolvency resolution process and submission of claims was called under section 15 on August 24, 2017. Pursuant to such public announcement, the IRP/ RP of the Corporate Debtor has received certain claims from statutory authorities which was admitted under the provisions of Insolvency and Bankruptcy Code, 2016 (IBC code) and subsequent settlement made as per the approved resolution plan. Accordingly, the Corporate Debtor/ Resolution Applicant/ SPV will have no additional exposure arising out of the claims towards the Statutory Dues which have not been admitted and/or the claims which have been rejected (partly or fully) by the RP and/or because of the re-classification in the category of creditor(s)
Considering the above, all statutory liabilities of pre-CIRP period is considered as completely settled and no liability, whatsoever, including contingent in nature is existing on implementation of the resolution plan.
** The Company has taken certain lands on lease for its operations in respect of which the lease agreement expired before the date of commencement of the Corporate Insolvency Resolution Process. As part of the right to review the existing agreements, the Company has made a detailed assessment of the market rent for the property and the market value of the property for outright purchase. Since the present rent as per erstwhile lease agreements is significantly high considering the market value of the property itself, the Company is in talks with the lessor for renewal of the lease with lower rent or for outright purchase of the property as part of the implementation of the resolution plan. However, no finality is reached on this matter as of date.
Pending completion of the negotiation, the Company has disputed the portion of the lease rent, considered to be excessive than the market rate, amounting to Rs.2,051.33 Lakhs upto March 31, 2022 in respect of the aforesaid lease. Based on the legal opinion obtained, the management is of the opinion that no liability will arise on completion of the negotiation.
The operations of the Company falls under a single operating segment i.e., "Pharmaceuticals" in accordance with Ind AS 108 "Operating Segments" and hence no segment reporting is applicable. Since the Company has also laid down consolidated financial statements, the disclosures required as per Ind AS 108 is given as part of notes on accounts of the consolidated financial statements.
47 Terms and conditions of borrowingsLong term borrowings - Term loans from banks
As per the terms of the Loan agreement, Interest for the Rupee Term loan is 1Y MCLR 1.80%; commission for the LC in case of import : 0.50% GST and in case of inland : 3.60% GST. These loans are Repayable in 20 equal quarterly installments after a moratorium period of one year from the date of disbursement (i.e. June 2021)
The above rupee term loan got converted in to Foreign Currency Term Loan (FCTL) on December 6, 2021 with interest rate @ 6 Months LIBOR plus 2.25% margin. These Loans are repayable in 18 equal quarterly installments starting from December 2021
ii) First charge on all movable fixed assets by way of hypothecation, of all movable fixed assets including movable plant and machinery, machinery, spares, tools and accessories, furniture & fixtures, vehicles, etc. present and future
iii) First charge over
a) all the rights, titles, interest, benefits, claims & demand whatsoever of the Company and as amended, varied or supplemented from time to time
b) all the title, interest, benefits, claims and demands whatsoever of the Company in any letter of credit, guarantee, performance bond provided by any party to the Company present or future.
c) First pari-passu charge on intangibles, goodwill, uncalled capital , present and future
iv) First charge by way of hypothecation over the entire current assets (both present & future)
v) Pledge of 50% of fully paid up equity shares of the Company held by the promoters to the lender through security trustee arrangement. In case of any restriction under Banking Regulation Act, promoter to pledge 30% of the fully paid up equity shares of the Company and provide Non Disposal Undertaking for the balance 20% with specific power of attorney authorizing Bank to sell those shares.
vi) The term loans are additionally secured by personal guarantee given by one of the director of the Company Mr. Manish Dhanuka and one of the director of the holding company Mr. Mahendra Kumar Dhanuka
Long term borrowings - 0% Optionally Convertible Debentures
During the year ended March 31, 2020, the Company has issued 14,300 0% Optionally Convertible Debentures (OCD) of Rs.1,00,000 each. In case, the OCD holders exercise their option to convert the same, then the said conversion shall happen only on the basis of face value of each of the OCD and no interest shall be payable to the OCD holders. However, if the OCD holders opt not to exercise their option for conversion, then the OCL holders shall be entitled to redemption premium of atleast 11 % IRR on annual basis on the amount of the said OCDs or such higher amount as the Board decides after considering the market price of shares of the Company; however in any case, redemption premium shall not exceed beyond 18% IRR on an annual basis. The said OCD, till the time it is not converted into equity shares, shall not be listed on any stock exchange in India and are permitted to be transferred only with the permission of the Board of Directors of the Company. Further there shall be no redemption of OCDs, including payment of interest/ other kind of return of what so ever nature thereon, until entire outstanding of the loan availed from Union Bank of India is paid in full to the lender.
The cash credit limits and working capital demand loan with the banks are secured by:
i) Current Assets - First Pari pasu charge by way of hypothecation over the entire current assets, both present and future.
ii) Movable Fixed assets - Second charge on all movable fixed assets by way of hypothecation, of all movable fixed assets including movable plant and machinery, machinery, spares, tools and accessories, furniture & fixtures, vehicles, etc. present and future.
iii) Second charge by way of mortgage of land/ leasehold rights and all the buildings present and future of Orchid Pharma Limited. First pari passu charge over all the rights, titles, interests, benefits, claims and demand whatsoever of OPL and as amended, varied or supplemented from time to time and first pari passu charge on all the titles, interests, benefits, claims and demand whatsoever of OPL, in any letter of credit, guarantee or performance bond provided by any party to OPL, present or future. First pari passu charge on intangibles, goodwill uncalled capital present and future.
iv) Personal guarantee of Mr. Manish Dhanuka and Mr. Mahendra Kumar Dhanuka
48 Financial InstrumentsCapital management
The Company manages its capital to ensure that entities in the Company will be able to continue as going concern, while maximising the return to stakeholders through the optimisation of the debt and equity balance.
The Company determines the amount of capital required on the basis of annual operating plans and long-term product and other strategic investment plans. The funding requirements are met through equity, long-term borrowings and other short-term borrowings.
Financial risk management objectives
The treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
The Company seeks to minimise the effects of these risks by using natural hedging financial instruments and forward contracts to hedge risk exposures. The use of financial derivatives is governed by the Company''s policies approved by the board of directors, which provide written principles on foreign exchange risk, the use of financial derivatives, and the investment of excess liquidity. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Company''s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company actively manages its currency and interest rate exposure through its finance division, wherever required, to mitigate the risks from such exposures.
Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company actively manages its currency rate exposures through a centralised treasury division and uses natural hedging principles to mitigate the risks from such exposures.
Disclosure of hedged and unhedged foreign currency exposure
The carrying amounts of the Company''s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
Foreign currency sensitivity analysis
Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Company''s revenues from its operations. Any weakening of the functional currency may impact the Company''s cost of imports and cost of borrowings and consequently may increase the cost of financing the Company''s capital expenditures. The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a simultaneous parallel foreign exchange rates shift in the foreign exchange rates of each currency by 2%, which represents management''s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 2% change in foreign currency rates.
In management''s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because of the existing exchange earning capacity of the company on account of its EOU status (Export oriented undertaking) and higher proportion of earnings in foreign exchange through exports.
Interest rate risk management
The Company is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied. Further, in appropriate cases, the Company also effects changes in the borrowing arrangements to convert floating interest rates to fixed interest rates.
Interest rate sensitivity analysis
The sensitivity analysis below have been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management''s assessment of the reasonably possible change in interest rates.
If interest rates had been 25 basis points higher/lower and all other variables were held constant, the Company''s loss for the year ended March 31, 2022 would decrease/ increase by Rs. 36.95 lakhs (March 31, 2021 : Rs.91.00 lakhs). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.
Credit risk management
Credit risk arises when a customer or counterparty does not meet its obligations under a customer contract or financial instrument, leading to a financial loss. The Company is exposed to credit risk from its operating activities primarily trade receivables and from its financing/ investing activities, including deposits with banks and foreign exchange transactions. The Company has no significant concentration of credit risk with any counterparty.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure is the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables, margin money and other financial assets excluding equity investments.
(a) Trade Receivables
The Company has credit evaluation policy for each customer and based on the evaluation, credit limit of each customer is defined. Wherever the Company assesses the credit risk as high, the exposure is backed by either bank guarantee/letter of credit or security deposits.
The Company does not have higher concentration of credit risks to a single customer. As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default in payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
(b) Investments, Cash and Cash Equivalents and Bank Deposits
Credit Risk on cash and cash equivalents, deposits with the banks/financial institutions is generally low as the said deposits have been made with the banks/financial institutions, who have been assigned high credit rating by international and domestic rating agencies.
Credit Risk on Derivative Instruments is generally low as the Company enters into the Derivative Contracts with the reputed Banks.
Investments of surplus funds are made only with approved banks/ financial institutions/ counterparty. Investments primarily include bank deposits, etc. These bank deposits and counterparties have low credit risk. The Company has standard operating procedures and investment policy for deployment of surplus liquidity, which allows investment in bank deposit and restricts the exposure in equity markets.
Offsetting related disclosures
Offsetting of cash and cash equivalents to borrowings as per the bank agreement is available only to the bank in the event of a default. Company does not have the right to offset in case of the counter party''s bankruptcy, therefore, these disclosures are not required.
Liquidity risk management
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company invests its surplus funds in bank fixed deposits, which carry minimal mark to market risks. The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.
Liquidity tables
The following tables detail the Company''s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.
50 Retirement benefit plans Defined contribution plans
In accordance with Indian law, eligible employees of the Company are entitled to receive benefits in respect of Gratuity fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees'' salary. The contributions, as specified under the law, are made to the Provident fund, Gratuity fund, Superannuation fund as well as Employee State Insurance Fund.
The total expense recognised in profit or loss of Rs.589.34 Lakhs (for the year ended March 31, 2021: Rs. 535.68 Lakhs) represents contribution paid to these plans by the Company at rates specified in the rules of the plan.
Defined benefit plans (a) Gratuity
Gratuity is payable as per Payment of Gratuity Act, 1972. In terms of the same, gratuity is computed by multiplying last drawn salary (basic salary including dearness Allowance if any) by completed years of continuous service with part thereof in excess of six months and again by 15/26. The Act provides for a vesting period of 5 years for withdrawal and retirement and a monetary ceiling on gratuity payable to an employee on separation, as may be prescribed under the Payment of Gratuity Act, 1972, from time to time. However, in cases where an enterprise has more favourable terms in this regard the same has been adopted.
These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk and salary risk.
Investment risk The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the market yields on government bonds denominated in Indian Rupees. If the actual return on plan asset is below this rate, it will create a plan deficit.
Interest risk A decrease in the bond interest rate will increase the plan liability. However, this will be partially offset by an increase in the return on the plan''s debt investments.
Longevity risk The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.
Salary risk The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan
participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.
(e) Proceedings under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder
There are no proceedings initiated or are pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder
(f) Borrowings from banks
The Company is not declared as wilful defaulter by any bank or financial Institution or other lenders.
(g) Relationship with Struck off Companies
The Company did not have any transactions with Companies struck off under Section 248 of Companies Act, 2013 or Section 560 of Companies Act, 1956 considering the information available with the Company.
(h) Compliance with number of layers of companies
The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.
Formula adopted for above Ratios:
Current Ratio = Current Assets / (Total Current Liabilities - Security Deposits payable on Demand - Current maturities of Long Term Debt)
Debt-Equity Ratio = Total Debt / Total Equity
Debt Service Coverage Ratio = (EBITDA - Current Tax) / (Principal Repayment Gross Interest on term loans)
Return on Equity Ratio = Total Comprehensive Income / Average Total Equity
Inventory Turnover Ratio (Average Inventory days) = 365 / (Net Revenue / Average Inventories)
Trade receivables Turnover Ratio (Average Receivables days) = 365 / (Net Revenue / Average Trade receivables)
Trade Payables Turnover Ratio (Average Payable days) = 365 / (Net Revenue / Average Trade payables)
Net Capital Turnover Ratio = (Inventory Turnover Ratio Trade receivables turnover ratio - Trade payables turnover ratio)
Net Profit Ratio = Net Profit / Net Revenue
Return on Capital employed = (Total Comprehensive Income Interest) / (Average of (Equity Total Debt)
Return on Investment (Assets) = Total Comprehensive Income / Average Total Assets
Reasons for Variation if more than 25%Current Ratio
The current ratio have been decreased mainly due to decrease in non current asset held for sale compared to the previous year. Debt equity ratio
Major portion of the term loans have been repaid during the year and accordingly, the Debt Equity Ratio has decreased.
Due to significant decrease in loss, due to profit on sale of IKKT undertaking, the Debt Service Coverage Ratio has significantly improved.
(j) Scheme of arrangements
There are no Scheme of Arrangements approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013 during the year.
(k) Advance or loan or investment to intermediaries and receipt of funds from intermediaries
The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall (i) 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 (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
The company has also not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall (i) 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 (ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
The Company do not have any transaction which are not recorded in the books of accounts that has been surrendered or disclosed as income in the tax assessments under the Income Tax Act, 1961 during any of the years.
(m) Details of Crypto Currency or Virtual Currency
The Company did not trade or invest in Crypto Currency or virtual currency during the financial year. Hence, disclosures relating to it are not applicable.
During the year, the Company has completed the sale of IKKT division, which was previously classified as disposal group as per Ind AS 105. "Non-current Assets Held for Sale and Discontinued Operations"
53. Due to the restrictions imposed due to Covid''19, the Company could not complete the proposed sale of land and buildings at Orchid Towers as planned. The Company has received quotes from certain parties and is confident of completing the sale during the current year. Accordingly, no change has been made in the classification of the aforesaid assets in the previous year.
54. The Company is required to comply with the amendments in Schedule III of Companies Act, 2013 notified on 24-03-2021, with effect from 01-04-2021. Accordingly the Company has complied with the disclosure and presentation requirements as per the aforesaid amendments and reclassified the following items in the previous years, to conform to current year classification.
Mar 31, 2018
1 Corporate Information
Orchid Pharma Ltd., is one of the leading pharmaceutical companies in India head quartered in Chennai and involved in the development, manufacture and marketing of diverse bulk actives, formulations and nutraceuticals with exports spanning over 40 countries. Orchidâs world class manufacturing infrastructure include USFDA compliant API and Finished Dosage Form facilities at Chennai in India. Orchid has dedicated state-of-art and GLP compliant R&D infrastructure for Process research, Drug Discovery and Pharmaceutical research at Chennai, India. Orchid has ISO 14001 and OHSAS 18001 certifications. Orchidâs Equity shares are listed on the National Stock Exchange of India Limited (NSE) and the BSE Limited (BSE) in India.
The Honâble National Company Law Tribunal (âNCLTâ), Chennai Bench, admitted the Corporate Insolvency Resolution Process (âCIRPâ) application filed by an operational creditor of Orchid Pharma Limited (âthe Companyâ) and appointed an Interim Resolution Professional (âIRPâ), in terms of the Insolvency and Bankruptcy Code, 2016 (âthe Codeâ) to manage the affairs of the Company vide CP.No. CP/ 540/ (IB)/ CB/ 2017, dated August 17, 2017. Subsequently, Mr. Ramkumar Sripatham Venkatasubramanian (IP Registration no. IBBI/IPA-001/IP-P00015/2016-17/10039) was appointed as the Resolution Professional (âRPâ) of the Company, by an order of NCLT with effect from October 27, 2017.
As per the order of the company NCLT, the powers of the board directors of the company shall stand suspended and shall vest with the RP.
2 Basis of preparation of financial statements Statement of compliance
These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 (âthe Actâ) (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
Basis of preparation and presentation
For all periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).
The financial statements for the year ended March 31, 2018 are the first financial statements the Company has prepared in accordance with Ind AS with the date of transition as April 1, 2016. Refer to note 53 for information on how the Company adopted Ind AS.
The Companyâs net worth as on the reporting date is negative. Considering the resolution plan submitted to the Honâble NCLT, in the opinion of the management, the Company could be able to continue its operations without signficant curtailment in the foreseeable near future and make a turnaround based on the business plans proposed in the said resolution plan. Pending approval of the Honâble NCLT on the proposed resolution plan and expected implementation of the resolution plan as part of CIRP, the financial statements have been prepared and presented by the Company on a going concern basis.
Use of estimates
The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in current and future periods.
Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is the Companyâs functional currency. All financial information presented in INR has been rounded to the nearest Lakhs (up to two decimals). The financial statements are approved for issue by the Companyâs Resolution Professionals/ Board of Directors on August 21, 2018.
2A Critical accounting estimates and management judgments
In application of the accounting policies, which are described in note 2, the management of the Company is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and assumptions are based on historical experience and other factors that are considered to be relevant.
Information about significant areas of estimation, uncertainty and critical judgements used in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:
Property, Plant and Equipment (PPE) and Intangible Assets
The residual values and estimated useful life of PPEs and Intangible Assets are assessed by the technical team at each reporting date by taking into account the nature of asset, the estimated usage of the asset, the operating condition of the asset, past history of replacement and maintenance support. Upon review, the management accepts the assigned useful life and residual value for computation of depreciation/amortisation. Also, management judgement is exercised for classifying the asset as investment properties or vice versa.
Current tax
Calculations of income taxes for the current period are done based on applicable tax laws and managementâs judgement by evaluating positions taken in tax returns and interpretations of relevant provisions of law.
Deferred Tax Assets
Significant management judgement is exercised by reviewing the deferred tax assets at each reporting date to determine the amount of deferred tax assets that can be retained/ recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
Fair value
Management uses valuation techniques in measuring the fair value of financial instruments where active market quotes are not available. In applying the valuation techniques, management makes maximum use of market inputs and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, management uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices that would be achieved in an armâs length transaction at the reporting date.
Impairment of Trade Receivables
The impairment for trade receivables are done based on assumptions about risk of default and expected loss rates. The assumptions, selection of inputs for calculation of impairment are based on management judgement considering the past history, market conditions and forward looking estimates at the end of each reporting date.
Impairment of Non-financial assets (PPE/ Intangible Assets)
The impairment of non-financial assets is determined based on estimation of recoverable amount of such assets. The assumptions used in computing the recoverable amount are based on management judgement considering the timing of future cash flows, discount rates and the risks specific to the asset.
Defined Benefit Plans and Other long term employee benefits
The cost of the defined benefit plan and other long term employee benefits, and the present value of such obligation are determined by the independent actuarial valuer. An actuarial valuation involves making various assumptions that may differ from actual developments in future. Management believes that the assumptions used by the actuary in determination of the discount rate, future salary increases, mortality rates and attrition rates are reasonable. Due to the complexities involved in the valuation and its long term nature, this obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities could not be measured based on quoted prices in active markets, management uses valuation techniques including the Discounted Cash Flow (DCF) model, to determine its fair value The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is exercised in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
Provisions and contingencies
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the reporting date. The actual outflow of resources at a future date may therefore vary from the figure estimated at end of each reporting period.
2B Recent accounting pronouncements Standards issued but not yet effective
The following standards have been notified by Ministry of Corporate Affairs
a. Ind AS 115 - Revenue from Contracts with Customers (effective from April 1, 2018)
b. Ind AS 116 - Leases (effective from April 1, 2019)
The Company is evaluating the requirements of the above standards and the effect on the financial statements is also being evaluated.
3 Terms and conditions of borrowings Long term borrowings
As per the terms of the CDR package, all Indian rupee loans from bank carries interest @10.30% p.a (SBI Base Rate 100 Basis points).These loans are repayable in 32 quarterly instalments commencing from the quarter beginning on April 1, 2015. These loans are secured by Pari Passu first charge by way of joint mortgage on immovable and movable assets situated at Factory premises at SIDCO Industrial Area, Alathur, SIPCOT Industrial Park, Irungattukottai, Corporate Office Premises, Nungambakkam and second charge on current assets, subject to prior charges created/ to be created on current assets in favour of bankers and financial institutions for securing working capital borrowings. All term loans are additionally secured by personal guarantee of Shri K.Raghavendra Rao, Managing Director of the Company.
As per the terms of the CDR package, all Foreign Currency term loan carries interest @ LIBOR plus 3 to 4.6%..The loan is repayable in 32 quarterly instalments commencing from the quarter beginning on April 1, 2015. These loans are secured by Pari Passu first charge by way of joint mortgage on immovable and movable assets situated at Factory premises at SIDCO Industrial Area, Alathur, SIPCOT Industrial Park, Irungattukottai, Corporate Office Premises, Nungambakkam and second charge on current assets, subject to prior charges created/ to be created on current assets in favour of bankers and financial institutions for securing working capital borrowings. The term loans are additionally secured by personal guarantee of Shri K.Raghavendra Rao, Managing Director of the Company.
The terms of the foreign currency term loan availed in Feb 2012 includes covenants pertaining to financial parameters such as limit on aggregate debt outstanding, debt service coverage ratio, ratio of net borrowings to EBDITA, Fixed assets coverage ratio, ratio of net borrowings to tangible net worth etc., tested on the consolidated financial statements of the Company.
Short term borrowings
Packing Credit and Cash Credit from Banks are secured by first charge on all current assets, namely, Stocks of Raw Materials, Semi-finished and Finished Goods, Stores and Spares not relating to Plant and Machinery (Consumable Stores and Spares), Bills Receivable, Book Debts and all other movable property both present and future excluding such movables as maybe permitted by the Banks/ financial institutions from time to time and by second charge on immovable properties after charges created/ to be created on immovable assets in favour of Financial Institutions/ Banks for securing Term Loans. The borrowings from banks are additionally secured by personal guarantee of Shri. Raghavendra Rao, Managing Director of the Company.
4 Financial Instruments
Capital management
The Company manages its capital to ensure that entities in the Company will be able to continue as going concern, while maxi- mising the return to stakeholders through the optimisation of the debt and equity balance.
The Company determines the amount of capital required on the basis of annual operating plans and long-term product and | other strategic investment plans. The funding requirements are met through equity, long-term borrowings and other short-term borrowings.
For the purposes of the Companyâs capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity holders.
Financial risk management objectives
The treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations through internal risk reports which analyse exposures by | degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), | credit risk and liquidity risk.
The Company seeks to minimise the effects of these risks by using natural hedging financial instruments and forward contracts to ! hedge risk exposures. The use of financial derivatives is governed by the Companyâs policies approved by the board of directors, i I which provide written principles on foreign exchange risk, the use of financial derivatives, and the investment of excess liquidity. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative j purposes.
Market risk
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in ! the price of a financial instrument. The Companyâs activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company actively manages its currency and interest rate exposure through its finance ! division, wherever required, to mitigate the risks from such exposures.
Foreign currency risk management
| The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctua-i | tions arise. The Company actively manages its currency rate exposures through a centralised treasury division and uses natural | hedging principles to mitigate the risks from such exposures.
Disclosure of hedged and unhedged foreign currency exposure
The carrying amounts of the Companyâs foreign currency denominated monetary assets and monetary liabilities at the end of the I reporting period are as follows:
Foreign currency sensitivity analysis
Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the 1 Companyâs revenues from its operations. Any weakening of the functional currency may impact the Companyâs cost of imports and cost of borrowings and consequently may increase the cost of financing the Companyâs capital expenditures. The foreign i j exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency | and a simultaneous parallel foreign exchange rates shift in the foreign exchange rates of each currency by 2%, which represents managementâs assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 2% change in foreign currency rates.
In managementâs opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because of the existing i I exchange earning capacity of the company on account of its EOU status (Export oriented undertaking) and higher proportion of earnings in foreign exchange through exports.
Interest rate risk management
The Company is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The risk is I managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. Hedging activities are I 1 evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies I are applied. Further, in appropriate cases, the Company also effects changes in the borrowing arrangements to convert floating i interest rates to fixed interest rates.
Interest rate sensitivity analysis
The sensitivity analysis below have been determined based on the exposure to interest rates for non-derivative instruments at the j end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at j | the end of the reporting period was outstanding for the whole year. A 25 basis point increase or decrease is used when reporting j interest rate risk internally to key management personnel and represents managementâs assessment of the reasonably possible | change in interest rates.
The 25 basis point interest rate changes will impact the profitability by INR 793.81 Lakhs for the year (Previous INR 884.94 Lakhs)
As the quantum of debt which will be continued to be serviced is yet to be determined as on March 31,2018 on account of CIRP j i ! proceedings pending for approval before NCLT, the interest rate sensitivity analysis for the existing quantum of debt may not j represent any reasonable situation.
Credit risk management
Credit risk arises when a customer or counterparty does not meet its obligations under a customer contract or financial instru- | i ment, leading to a financial loss. The Company is exposed to credit risk from its operating activities primarily trade receivables j and from its financing/ investing activities, including deposits with banks and foreign exchange transactions. The Company has j no significant concentration of credit risk with any counterparty.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure is the total of the | | carrying amount of balances with banks, short term deposits with banks, trade receivables, margin money and other financial | assets excluding equity investments.
(a) Trade Receivables
! The Company has credit evaluation policy for each customer and, based on the evaluation, credit limit of each customer is de- I i | fined. Wherever the Company assesses the credit risk as high, the exposure is backed by either bank, guarantee/letter of credit j or security deposits.
I The Company does not have higher concentration of credit risks to a single customer. As per simplified approach, the Company j | i makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default in payments | I and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.
(b) Investments, Cash and Cash Equivalents and Bank Deposits
Credit Risk on cash and cash equivalents, deposits with the banks/financial institutions is generally low as the said deposits have | I been made with the banks/financial institutions, who have been assigned high credit rating by international and domestic rating j agencies.
I | Credit Risk on Derivative Instruments is generally low as the Company enters into the Derivative Contracts with the reputed < I Banks.
i Investments of surplus funds are made only with approved banks/ financial institutions/ counterparty. Investments primarily j | | include bank deposits, etc. These bank deposits and counterparties have low credit risk. The Company has standard operating | i procedures and investment policy for deployment of surplus liquidity, which allows investment in bank deposit and restricts the j exposure in equity markets.
Offsetting related disclosures
Offsetting of cash and cash equivalents to borrowings as per the bank agreement is available only to the bank in the event of a | | default. Company does not have the right to offset in case of the counter partyâs bankruptcy, therefore, these disclosures are not | | required.
Liquidity risk management
| Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management | j is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company invests its surplus j I funds in bank fixed deposits, which carry minimal mark to market risks. The Company also constantly monitors funding options i i available in the debt and capital markets with a view to maintaining financial flexibility.
Liquidity tables
I The following tables detail the Companyâs remaining contractual maturity for its non-derivative financial liabilities with agreed 1 repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the i earliest date on which the Company can be required to pay.
5 Related party disclosure
a) List of parties having significant influence
Holding company The Company does not have any holding company
Subsidiary Company Orchid Europe Limited, UK
Orchid Pharmaceuticals Inc., USA
Orgenus Pharma Inc., USA (Subsidiary of Orchid Pharmaceuticals Inc USA.)
Orchid Pharma Inc / Karalex Pharma USA, (Subsidiary of Orchid Pharmaceuticals Inc, USA)
Orchid Pharmaceuticals SA (Proprietary) Limited, South Africa Bexel Pharmaceuticals Inc., USA Diakron Pharmaceuticals Inc., USA
Key management personnel (KMP) Mr. K. Raghavendra Rao, Managing Director
Mr. L. Chandrasekar, Executive VP-Finance & Secretary
Relatives of KMP Mrs. R Vijayalakshmi, wife of Mr. K Raghavendra Rao
Ms R Divya and Ms R Sowmya, daughters of Mr. K. Raghavendra Rao
Entities in which relatives of KMP exercise Orchid Healthcare Private Ltd. significant influence
6 Retirement benefit plans Defined contribution plans
In accordance with Indian law, eligible employees of the Company are entitled to receive benefits in respect of Gratuity fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employeesâ salary. The contributions, as specified under the law, are made to the Provident fund, Gratuity fund, Superannuation fund as well as Employee State Insurance Fund.
The total expense recognised in profit or loss of Rs 777.87 Lakhs (for the year ended March 31, 2017: Rs. 437.96 Lakhs) represents contribution paid to these plans by the Company at rates specified in the rules of the plan.
Defined benefit plans
(a) Gratuity
Gratuity is payable as per Payment of Gratuity Act, 1972. In terms of the same, gratuity is computed by multiplying last drawn salary (basic salary including dearness Allowance if any) by completed years of continuous service with part thereof in excess of six months and again by 15/26. The Act provides for a vesting period of 5 years for withdrawal and retirement and a monetary ceiling on gratuity payable to an employee on separation, as may be prescribed under the Payment of Gratuity Act, 1972, from time to time. However, in cases where an enterprise has more favourable terms in this regard the same has been adopted.
Sensitivity analysis
In view of the fact that the Company for preparing the sensitivity analysis considers the present value of the defined benefit obligation which 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.
(b) Compensated absences
The leave scheme is a final salary defined benefit plan, that provides for a lumpsum payment at the time of separation; based on scheme rules the benefits are calculated on the basis of last drawn salary and the leave count at the time of separation and paid as lumpsum.
The above provisions are reflected under âProvision for employee benefits- leave encashmentâ (long-term provisions) [Refer note 20] and âProvision for employee benefits - leave encashmentâ (short-term provisions) [Refer note 25].
7 First-time adoption of Ind AS Transition to Ind AS These are the Companyâs first financial statements prepared in accordance with Ind AS.
The accounting policies set out in Note 3 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS balance sheet at April 1, 2016 (The companyâs date of transition).
In preparing its opening Ind AS balance sheet, the company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards generally applicable to the Company (as amended from time to time) and other relevant provisions of the Act (previous GAAP or Indian GAAP).
An explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows is set out in the following tables and notes.
A. Exemptions and exceptions availed
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
A.1 Ind AS optional exemptions
A.1.1 Deemed cost for PPE and Intangibles
Ind AS 101 permits a first-time adopter to elect to fair value a class of property, plant and equipment or to continue with the carrying value for all of its PPE as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities.
Accordingly, the company has elected to continue to measure the property, plant and equipment at their previous GAAP carrying values.
A.1.2. Deemed cost for Intangible Assets
Ind AS 101 permits a first-time adopter to elect to fair value the intangible assets or to continue with the carrying value as per the previous GAAP as deemed cost on the date of transition
The company has elected to continue the carrying value on the date of transition as per previous GAAP as deemed cost.
A.1.3. Designation of previously recognised financial instruments
Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI or FVTPL on the basis of the facts and circumstances at the date of transition to Ind AS. The company has elected to apply this exemption for its investment in equity investments.
A.1.4. Leases
Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material. The company has elected to apply this exemption for such contracts/ arrangements.
A.1.5. Business Combinations before the date of transition
As per Ind AS 101, a first time adopter of Ind AS may elect not to apply Ind AS 103 âBusiness Combinationsâ retrospectively in respect of business combinations that occurred before the date of transition to Ind AS. The company has elected to apply this exemption for the business combinations that occured prior to April 1, 2016.
A.2 Ind AS mandatory exceptions
A.2.1 Estimates
An entityâs estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates as at April 1, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The company made estimates for impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as these were not required under previous GAAP.
B. Notes to first-time adoption
B.1 Fair valuation of financial assets and liabilities
Under Ind AS, financial assets and liabilities are to be valued at amortised cost or fair valued through profit and loss (FVTPL) or fair valued through other comprehensive income (FVTOCI) based on the Companyâs business objectives and the cash flow characteristics of the underlying financial assets and liabilities. The Company has remeasured the financial assets and liabilities as on the date of transition and the consequential impact has been given in the opening retained earnings.
B.2 Allowance for expected credit loss on trade receivables
As per Ind AS 109, the company is required to apply expected credit loss model for recognising the allowance for doubtful debts. As a result, the total equity as at March 31, 2017 decreased by Rs. 308.69 lakhs and profit for the year ended March 31, 2017 decreased by Rs. 308.69 lakhs.
B.3 Straight-lining of rental expense
As per Ind AS 17, in the case of operating leases, lease payments are recognised as an expense on a straight-line basis unless another systematic basis is representative of the time pattern of the userâs benefit, even if the payments are not on that basis. Accordingly, the company has re-measured the rental expense for the year on a straight-line basis.
B.4 Remeasurement of post-employment benefit obligations
Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. Adjustments have been made for such re-classifications/ remeasurements.
B.5 Income Tax relating to earlier years
As per Ind AS 101, the items not meeting the recognition criteria of an asset as per Ind AS are to be derecognised while preparing the opening Ind AS balance sheet with corresponding adjustment in the retained earnings. The company has assessed the tax balances and made the required adjustments as on April 1, 2016.
B.6 Deferred tax
Under Ind AS, the deferred tax asset and liabilities are required to be accounted based on balance sheet approach and also to be recognised on all adjustments considered in the opening Ind AS balance sheet. Accordingly, the Company has remeasured its deferred tax assets and liabilities as aforesaid and accounted in the Ind AS financial statements.
B.7 Excise duty
Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended March 31, 2018 by Rs. 488.34 lakhs (previous year Rs. 1,093.25 lakhs). There is no impact on the total equity or profit as a result of this adjustment.
8 The net worth of all the subsidiaries as on the reporting date is negative. In the opinion of the management, these investments are strategic and long term in nature and hence no provision is considered necessary against the carrying value of investments in subsidiaries (net of provisions) aggregating to Rs. 12,369.90 Lakhs and the loans/ advances given to given to these subsidiaries (net of provisions) aggregating to Rs. 5,229.36 Lakhs.
9 The Company is in the process of carrying out a comprehensive confirmation and reconciliation of receivables, loans and advances given, payables, bank balances and other financial assets, the claims received from the employees, financial creditors (including excess/ short provision of interest, non-provision of penal interest by the Company considering the agreement reached by the joint lenders meeting) and operational creditors with the books of account.
Further, the Company is in the process of carrying out physical verification of fixed assets/ related reconciliation with the books of account and reconciliation of restatement account of foreign currency assets and liabilities.
Pending completion of the aforesaid comprehensive reconciliation, the possible impact, if any, is not presently determinable. Accordingly, no adjustment has been made in the financial statements.
10 The Committee of Creditors have favourably voted for the resolution plan proposed by one of the successful bidder, which has been filed by the RP with the Honâble NCLT. However, the final order of the Honâble NCLT is yet to be pronounced/ received by the Company.
Pending receipt of the aforesaid Order, no effect has been given in the financial statements for the possible adjustments, if any, required in the carrying amount of assets and liabilities, possible presentation and disclosure requirements,
Mar 31, 2016
1. Sales tax recoverable has been recorded on the basis of the claims submitted or in the process of being submitted, as per rules relating to EOU and which in the opinion of the Company are recoverable.
2. Excise duty on finished goods has been accounted on removal of goods from factory, wherever applicable. Finished goods at factory have been valued at cost exclusive of excise duty and no provision has been made for excise duty on such goods. The above treatment has no impact on Profit & Loss account.
a) ORCHID ESOP 2010 SCHEME
In terms of the resolution passed by the company at the AGM dated July 21, 2010 the shareholders approved the scheme formulated under âORCHID-ESOP 2010" for allotting 10,00,000 options. Accordingly 9,01,000 options were granted to the eligible Employees and the Executive Director except the Promoter Director by the Compensation Committee of the Board of Directors at a meeting held on October 28, 2010. Each option is convertible into one equity share of Rs.10/- each at a price of Rs. 329.55 per share, being the closing share price of Orchid in the National Stock Exchange on October 27, 2010, the day prior to the date of the meeting.
Considering the fall in the price of the shares of the Company and in the interest of the employees, the Compensation Committee of the Board of Directors at its meeting held on November 1, 2011 considered reprising of 8,64,500 options in force on the said date from Rs. 329.55 to Rs.166.15 as per the closing share price of Orchid at National Stock Exchange on October 31, 2011. As at March 31, 2016, the outstanding options yet to be exercised under the said scheme is Nil.
b) ORCHID ESOP - DIRECTORS 2011 SCHEME
In terms of the resolution passed by the company at the AGM held on July 29, 2011 the shareholders approved a scheme formulated as âORCHID ESOP - DIRECTORS 2011 SCHEME" for allotting 5,00,000 options to Directors of the Company. Accordingly 3,00,000 options were granted to the Directors of the Company including the Whole Time Director but excluding the Promoter Director, by the Compensation Committee of the Board of Directors at a meeting held on November 1, 2011. Each option is convertible into one equity share of Rs.10/- each at a price of Rs.166.15 per share, being the closing share price of Orchid in the National Stock Exchange Ltd on October 31, 2011, the day prior to the date of the meeting. Out of the total options granted, 240,000 options have already lapsed and 60,000 options are in force as at March 31, 2016 under ORCHID ESOP - DIRECTORS 2011 Scheme.
c) ORCHID ESOP - SENIOR MANAGEMENT 2011 SCHEME
In terms of the resolution passed by the company at the AGM held on July 29, 2011 the shareholders approved a scheme formulated as âORCHID ESOP - SENIOR MANAGEMENT 2011 SCHEME" for allotting 10,00,000 options to senior employees of the Company out of which 7,50,000 options will be granted to the employees of the Company and 2,50,000 options will be granted to the employees of its subsidiary companies. Accordingly 42,700 options were granted to the Employees of the Company by the Compensation Committee of the Board of Directors at a meeting held on November 01, 2011. Each option is convertible into one equity share of Rs.10/- each at a price of Rs. 10/- each (i.e. At Par). 21,350 options are in force as at March 31, 2016 under ORCHID ESOP - SENIOR MANAGEMENT 2011 Scheme.
As per the terms of the CDR package, all Indian rupee loan from bank carries interest at SBI Base rate plus 100 Bps. These loans are repayable in 32 quarterly installments from 01/04/2015. These loans are secured by Pari Passu charge by way of joint mortgage on immovable and movable assets situated at Factory premises at SIDCO Industrial Area, Alathur and SIPCOT Industrial Park, Irungattukottai and current assets, subject to prior charges created/ to be created on current assets in favour of bankers and financial institutions for securing working capital borrowings. All term loans are additionally secured by personal guarantee of Shri K.Raghavendra Rao, Managing Director of the Company.
Terms of repayment of loan-All Foreign Currency term loan carries interest @ LIBOR plus 3 to 4.6%.The loan is repayable in 32 quarterly installments commencing from 01/04/2015. These loans are secured by Pari Passu charge by way of joint mortgage on immovable and movable assets situated at Factory premises at SIDCO Industrial Area, Alathur and SIPCOT Industrial Park, Irungattukottai and current assets, subject to prior charges created / to be created on current assets in favour of bankers and financial institutions for securing working capital borrowings. The term loans are additionally secured by personal guarantee of Shri K.Raghavendra Rao, Managing Director of the Company. The terms of the foreign currency term loan availed in Feb 2012 includes covenants pertaining to financial parameters such as limit on aggregate debt outstanding, debt service coverage ratio, ratio of net borrowings to EBDITA, Fixed assets coverage ratio, ratio of net borrowings to tangible networth etc., tested on the consolidated financial statements of the Company.
3 Segmental Reporting
The Company was disclosing segment information classifying the business as Bulk drugs and Formulations till the financial year 2004-05. However in view of integration of bulk actives and formulations business, with the commissioning of Generics formu lation facilities from the financial year 2005-06, the Company considers the business as one interrelated and integrated business of âPharmaceutical products" and hence no separate segmental reporting is provided.
4 During the year, pursuant to the notification of Schedule II to the Companies Act, 2013 as applicable for the financial year beginning on or after 01/04/2014, the Company has revised the estimated useful life of some of its assets to align the useful life with those specified in Schedule II.
Pursuant to transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company has fully depreciated the carrying value of assets (determined after considering the revised useful life as prescribed by Schedule II), net of residual value, where the remaining useful life of the asset was determined to be nil as at 31/03/2015, and has adjusted an amount of Rs.1681.81 Lakhs against the opening balance of Reserves of the Company.
The Depreciation expense in the Statement of Profit and Loss for the year is lower by Rs.2,818.50 Lakhs consequent to the adoption of revised useful life as prescribed by Schedule II to the Companies Act, 2013.
5 Disclosure as required by Accounting Standard 15 (Revised) on Employee Benefits
A Defined Contribution Plan
i) The company contributes 12% of the salary for all eligible employees towards provided fund managed by the Central Government.
ii) The company also contributes a certain percentage of salary for all eligible employees in managerial cadre towards Superannuation Funds managed by Life Insurance Corporation of India
6. The company has paid managerial remuneration to its Managing Director amounting to Rs.68.20 Lakhs, which is within the limits prescribed by Schedule V to the Companies Act, 2013. The remuneration in respect of the Managing Director and Whole time director in excess of the limit prescribed under Schedule XIII to the Companies Act, 1956 during the previous yearâs amounted to Rs.1,193.51 Lakhs The said excess is subject to the approval of the members in General Meeting and from the Central Government.
7. During the FY 2015-16, the name of the Company has been changed from âOrchid Chemicals & Pharmaceuticals Ltd." to â Orchid Pharma Ltd." effective from 09/10/2015 vide approval from Registrar of Companies of even date.
8. Period and amount of continuing default as on the Balance sheet date
9. Previous year''s figures have been re-grouped wherever necessary to conform to current year''s classification.
10. Previous year figures are for 18 months and hence not strictly comparable with current year figures.
Mar 31, 2015
1. a) Orchid ESOP 2010 Scheme
In terms of the resolution passed by the Company at the AGM dated July
21,2010 the shareholders approved the scheme formulated under
"ORCHID-ESOP 2010" for allotting 10,00,000 options. Accordingly
9,01,000 options were granted to the eligible Employees and the
Executive Director except the Promoter Director by the Compensation
Committee of the Board of Directors at a meeting held on October 28,
2010. Each option is convertible into one equity share of Rs.10/- each
at a price of Rs.329.55 per share, being the closing share price of
Orchid in the National Stock Exchange on October 27, 2010, the day
prior to the date of the meeting.
Considering the fall in the price of the shares of the Company and in
the interest of the employees, the Compensation Committee of the Board
of Directors at its meeting held on November 1,2011 considered
repricing of 8,64,500 options in force on the said date from Rs.329.55
to Rs.166.15 as per the closing share price of Orchid at National Stock
Exchange on October 31,2011. Pursuant to exercise of options by the
employees, 10,000 equity shares of Rs.10/- each were issued during the
year 2012-13 and as at March 31,2015, the outstanding options yet to be
exercised under the said scheme is Nil
b) Orchid ESOP - Directors 2011 Scheme
In terms of the resolution passed by the Company at the AGM held on
July 29, 2011 the shareholders approved a scheme formulated as "ORCHID
ESOP - DIRECTORS 2011 SCHEME" for allotting 5,00,000 options to
Directors of the Company. Accordingly 3,00,000 options were granted to
the Directors of the Company including the Whole Time Director but
excluding the Promoter Director, by the Compensation Committee of the
Board of Directors at a meeting held on November 1,2011. Each option is
convertible into one equity share of Rs.10/- each at a price of
Rs.166.15 per share, being the closing share price of Orchid in the
National Stock Exchange on October 31,2011, the day prior to the date
of the meeting. Out of the total options granted, 2,20,000 options have
already lapsed and 80,000 options are in force as at March 31,2015
under ORCHID ESOP - DIRECTORS 2011 Scheme.
c) Orchid ESOP - Senior Management 2011 Scheme
In terms of the resolution passed by the Company at the AGM held on
July 29, 2011 the shareholders approved a scheme formulated as "ORCHID
ESOP - SENIOR MANAGEMENT 2011 SCHEME" for allotting 10,00,000 options
to senior employees of the Company out of which 7,50,000 options will
be granted to the employees of the Company and 2,50,000 options will be
granted to the employees of its subsidiary companies. Accordingly
42,700 options were granted to the Employees of the Company by the
Compensation Committee of the Board of Directors at a meeting held on
November 01,2011. Each option is convertible into one equity share of
Rs.10/- each at a price of Rs.10/- each (i.e. At Par). 32,025 options
are in force as at March 31,2015 under ORCHID ESOP - SENIOR MANAGEMENT
2011 Scheme.
During the year the Company has closed one of its wholly owned
subsidiary Orchid Singapore Pte. Ltd.
All whole time directors have been considered as Key Management
Personnel as they are involved in planning, directing and controlling
the activities of the reporting enterprise.
2. Extra-Ordinary Item are net of Taxes of Rs.14,525.69 Lakhs.
3. Segmental Reporting
The Company considers the business as one interrelated and integrated
business of "Pharmaceutical products" and hence no separate segmental
reporting is provided.
4. Disclosure as required by Accounting Standard 15 (Revised) on
Employee Benefits
A Defined Contribution Plan
i) The Company contributes 12% of the salary for all eligible employees
towards providend fund managed by the Central Government.
ii) The Company also contributes a certain percentage of salary for all
eligible employees in managerial cadre towards Superannuation Funds
managed by Life Insurance Corporation of India
5. The Governement of India, Ministry of Corporate Affairs has issued
a notification under Sec 211(4) of Companies Act, 1956 dated 08th
February 2011 exempting the disclosure of the quantitative details in
compliance of Paras 3(i)(a), 3(ii)(a), 3(ii)(b), and 3(ii)(d) of Part
II of Schedule VI of the Companies Act, 1956.
6. The Company has paid managerial remuneration to its Managing
Director, and Whole time director amounting to Rs.225.23 Lakhs. The
said remuneration in respect of the Managing Director, and Whole time
director exceeds the limit prescribed under Schedule XIII by Rs.45.23
Lakhs (Previous year Rs.737.59 Lakhs). The said excess is subject to
the approval of the members in General Meeting and from the Central
Government.
7. The financial year of the Company has been extended by 6 months
vide order of the Registrar of Companies dated 25/09/2014. Consequent
to the extension of financial year by six months, the profit/Loss
reported above was for a period of 18 months ending on 31.03.15.
8. In July 2014 the Company has completed the Business Transfer
Agreement (BTA) with Hospira Healthcare India Private Limited for the
sale and transfer of Orchid's Penicillin and Penem API business and the
API facility located in Aurangabad (Maharashtra) together with an
associated Process R&D infrastructure located in Chennai.
9. The Company has implemented the Corporate Debt Restructuring
package as approved by the CDR Empowered Group (CDR EG) in July 2014.
The restructuring package approved by CDR EG provided for
reschedulement of the repayment of the principal amount borrowed over a
period of 8 years commencing from 01/04/2015 with two years of
repayment holiday, reduction in interest rate of all borrowings,
carving out a portion of working capital facilities as Working Capital
Term Loan, Funding of interest on restructured Termloans (two years)
and working capital facilities (one year) commencing from 01/04/2013.
Consequent to the reduction in interest rates, a sum of Rs.4197.70
Lakhs, being the excess provision of interest made in the financials
has been reversed on implementation of CDR package.
10. In view of the CDR package implemented as mentioned in Note No:
46, the repayment obligations of the Company have been revised and the
repayments would commence from 01/04/2015 only.
11. Previous year's figures have been re-grouped wherever necessary to
conform to current year's classification.
Sep 30, 2013
1. Segmental Reporting
The Company was disclosing segment information classifying the business
as Bulk drugs and Formulations till thefinancia year 2004-05. However
in view of integration of bulk actives and formulations business, with
the commissioning of Generics formulation facilities from the financial
year 2005-06 , the Company considers the business as one interrelated
and integrated business of "Pharmaceutical products" and hence no
separate segmental reporting is provided.
2. Disclosure as required by Accounting Standard 15 (Revised) on
Employee Benefits
A Defined Contribution Plan
i) The Company contributes 12% of the salary for all eligible employees
towards provident fund managed by the Central Government, ii) The
Company also contributes a certain percentage of salary for all
eligible employees in managerial cadre towards
Superannuation Funds managed by Life Insurance Corporation of India
3. The Government of India, Ministry of Corporate Affairs has issued
a notification under Section 211 (4) of Companies Act, 1956 dated 08th
February 2011 exempting the disclosure of the quantitative details in
compliance of Paras 3(i)(a), 3(ii)(a), 3(ii)(b), and 3(ii)(d) of Part
II of Schedule VI of the Companies Act, 1956.
4. The Company has paid managerial remuneration to its Chairman and
Managing Director, and Whole time director amounting to Rs 859.86
lakhs. The said remuneration in respect of the Chairman and Managing
Director, and the Whole time director exceeds the limit prescribed
under Schedule XIII by Rs 737.62 lakhs (Previous year Rs 196.31 lakhs).
The said excess is subject to the approval of the members in General
Meeting and from the Central Government.
5. The financial year of the Company has been extended by 6 months
vide order of the Registrar of Companies dated 01/07/2013. Consequent
to the extension of financial year by six months, the profit/Loss
reported above was for a period of 18 months ending on 30.09.2013 and
hence not comparable as such with figures for the previous year (i.e)
2011-12.
6. The Company has entered into a Business Transfer Agreement (BTA)
dated August 29, 2012 with Hospira Healthcare India Private Limited for
the sale and transfer of Orchid''s Penicillin and Penem API business and
the API facility located in Aurangabad (Maharashtra) together with an
associated Process R&D infrastructure located in Chennai. As the
Business Transfer is not completed as at 30/09/2013, the results
include the figures of those businesses also.
7. The Company has applied for Corporate Debt Restructuring and the
application has been admitted on 24/08/2013. The accounts have been
prepared without considering the restructuring package. The concessions
to be given under the restructuring package including reschedulement of
loan repayments, concession of interest rate etc. will be accounted in
the year in which package is sanctioned and implemented.
Mar 31, 2012
1. During the year, Orchid Research Laboratories Limited (ORLL) was
merged with Orchid Chemicals & Pharmaceuticals Limited (OCPL) in terms
of High Court Order dated March 20, 2012 vide. Comp Pet No. 28 of 2012
The Honourable High Court of Madras sanctioned the Scheme of
Amalgamation for merger of Orchid Research Laboratories Limited (ORLL)
with Orchid Chemicals & Pharmaceuticals Limited (OCPL). The Financial
statements have been prepared in accordance with the order of the High
Court. The effective date of amalgamation for accounting purposes is
March 30,2012. The appointed date is April 1, 2010.
Orchid Chemicals & Pharmaceuticals Limited was incorporated in India in
July 1992 and started commercial production in February 1994. The
Company manufactures Active Pharmaceuticals Ingredients as 100% export
oriented unit and sells finished dosage forms (formulations) in
domestic and export markets. The Company also has a full fledged R&D
facilities.
Orchid Research Laboratories Limited (ORLL), India is engaged in
pharmaceutical research and development.
Orchid Research Laboratories Limited was 100% subsidiary of OCPL. The
share capital of ORLL was cancelled and no further issue of shares of
OCPL was carried out.
The value of difference being surplus between the assets and
liabilities of transferor Company transferred to the transferee
Company, at book value, after making adjustment for inter corporate
loans outstanding between transferor Company and transferee Company and
as reduced by the cost of investment of the transferee Company in the
equity shares of the transferor Company has been transferred to capital
reserve in the books of the transferee Company in accordance with the
above referred court order.
2. Sales Tax recoverable has been recorded on the basis of the claims
submitted or in the process of being submitted, as per rules relating
to EOU and which in the opinion of the Company are recoverable.
A) ORCHID-ESOP 2010 SCHEME
In terms of the resolution passed by the Company at the AGM held on
July 21,2010 the shareholders approved the scheme formulated
under"ORCHID-ESOP 2010"for allotting 1,000,000 options. Accordingly
901,000 options were granted to the eligible Employees and the
Executive Director except the Promoter Director by the Compensation
Committee of the Board of Directors at a meeting held on October
28,2010. Each option is convertible into one equity share of Rs
10/-each at a price of Rs 329.55 per share, being the closing share
price of Orchid in the National Stock Exchange on October 27,2010, the
day prior to the date of the meeting.
Considering the fall in the price of the shares of the Company and in
the interest of the employees, the Compensation Committee of the Board
of Directors at its meeting held on November 1,2011 considered
repricing of 864,500 options in force on the said date from Rs 329.55
to Rs 166.15 as per the closing share price of Orchid at National Stock
Exchange on October 31, 2011. Out of the total options granted, 47,000
options have already lapsed and the remaining granted options in force
as at March 31, 2012 under ORCHID-ESOP 2010 Scheme are 854,000.
The one year vesting period for the scheme ended on October 27, 2011
and the employees can exercise their right to convert the options into
equity shares from October 28, 2011 onwards. The options will lapse on
October 28, 2013, if they are not exercised within a period of 2 years
from the date of vesting of options. As at March 31, 2012, no options
were exercised.
B) ORCHID-ESOP DIRECTORS 2011 SCHEME
In terms of the resolution passed by the Company at the AGM held on
July 29, 2011 the shareholders approved a scheme formulated as
"ORCHID-ESOP Directors 2011 SCHEME" for allotting 500,000 options to the
Directors of the Company. Accordingly 300,000 options were granted to
the Directors of the Company including the Whole Time Director but
excluding the Promoter Director, by the Compensation Committee of the
Board of Directors at a meeting held on November 01, 2011. Each option
is convertible into one equity share of Rs 10/- each at a price of Rs
166.15 per share, being the closing share price of Orchid in the
National Stock Exchange on October 31, 2011, the day prior to the date
of the meeting. Out of the total options granted, 50,000 options have
already lapsed and remaining granted options in force as of March 31,
2012 under ORCHID-ESOP Directors 2011 Scheme are 250,000.
C) ORCHID-ESOP SENIOR MANAGEMENT 2011 SCHEME
In terms of the resolution passed by the Company at the AGM held on
July 29, 2011 the shareholders approved the scheme formulated as
"ORCHID-ESOP Senior Management 2011 SCHEME" for allotting 1,000,000
options to the senior employees of the Company out of which 750,000
options will be granted to the employees of the Company and 250,000
options will be granted to the employees of its subsidiary companies.
Accordingly 42,700 options were granted to the senior employees of the
Company by the Compensation Committee of the Board of Directors at a
meeting held on November 01, 2011. Each option is convertible into one
equity share of Rs 10/- each at a price of Rs 10/- each (i.e. At Par).
42,700 options are in force as at March 31, 2012 under ORCHID-ESOP
Senior Management 2011 Scheme."
@ amount due includes for all installments in the respective category
Terms of repayment of loan- All Indian rupee loan from bank carries
interest @14.75% to 16.25% p.a. These loans are repayable in 36 to 54
equivated monthly and 8 to 18 quarterly installments from the date of
the origination. These loans are secured by Pari Passu charge by way of
joint mortgage on immovable and movable assets situated at Factory
premises at SIDCO Industrial Area, Alathur, MIDC Industrial Area,
Aurangabad, SIPCOT Industrial Park, Irungattukottai and R&D premises at
Shozhanganallur and current assets, subject to prior charges created/
to be created on current assets in favour of bankers and financial
institutions for securing working capital borrowings. Total term loans
aggregating Rs 53,652.89 lakhs are additionally secured by personal
guarantee of Shri K Raghavendra Rao, Chairman & Managing Director of
the Company
Terms of repayment of loan- All Foreign Currency term loan carries
interest @ LIBOR plus 3 to 4.6%. The loan is repayable in 8 to 24
quarterly and 10 half yearly installments from the date of the
orgination. These loans are secured by Pari Passu charge by way of
joint mortgage on immovable and movable assets situated at Factory
premises at SIDCO Industrial Area, Alathur, MIDC Industrial Area,
Aurangabad, SIPCOT Industrial Park, Irungattukottai and R&D premises at
Shozhanganallur and current assets, subject to prior charges created/
to be created on current assets in favour of bankers and financial
institutions for securing working capital borrowings. Total term loans
aggregating Rs 54,187.20 lakhs are additionally secured by personal
guarantee of Shri K Raghavendra Rao, Chairman & Managing Director of
the Company. The terms of the foreign currency term loan availed in
February 2012 includes covenants pertaning to financial parameters such
as limit on aggregate debt outstanding, debt service coverage ratio,
ratio of net borrowings to EBDITA, Fixed assets coverage ratio, ratio
of net borrowings to tangible networth etc., tested on the consolidated
financial statements of the Company
The Company raised FCCBs during 2006-07 aggregating to US$ 175 million
(Rs 77,358.75 lakhs) with an option to the investor to convert the
FCCBs into equity shares of the Company at an initial conversion price
of Rs 348.335 per share at a fixed rate of exchange on conversion Rs
43.93 = US$ 1, at any time after April 9, 2007 and prior to February
18, 2012. Further the Company had an option of early redemption of
these FCCBs in whole at any time on or after February 28, 2010 and
prior to February 21, 2012, subject to certain conditions. Unless
previously converted, redeemed or repurchased and cancelled, the FCCBs
were to be redeemed on February 28,2012 at 142.77% of their principal
amount. During the year 2008-09, the Company bought back FCCBs to the
extent of US$ 37.80 million and the outstanding FCCBs as at March
31,2009 was US$ 137.20 million.
During the year 2009-10, the Company bought back FCCBs to the extent of
US$ 19.778 million and the outstanding FCCBs as at March 31,2011 wasUS$
117.422 million.
During the year 2011-12, the Company redeemed the outstanding FCCBs,
including yield-to-maturity at 142.77% of the principa amount
aggregating to US$ 167.64 million (Rs 82,408.00 lakhs) on the due date
ie. February 28,2012.
The Company raised FCCBs during the year 2005-06 aggregating to US$
42.50 million (Rs 19,284.50 lakhs) including a green shoe option of US$
5 million (Rs 2,289.50 lakhs) with an option to the investor to convert
the FCCBs into equity shares or global depository receipts at an
initial conversion price of Rs 243.80 per share at a fixed rate of
exchange on conversion Rs 44.94 = US$ 1. Out of the above, FCCBs
amounting to US$ 22.79 million (Rs 10,241.82 lakhs) were converted.
Further, the Company had an option of early redemption of these FCCBs
at any time after November 03, 2006 subject to certain conditions.
Unless previously converted, redeemed or repurchased and cancelled, the
FCCBs were to be redeemed on November 03, 2010 at 147.1688% of their
principal a mount.
During 2008-09, the Company bought FCCBs to the extent of US$ 2.25
million and the outstanding FCCBs as at March 31,2010 was US$ 17.46
million. During the year 2010- 11, the Company redeemed the outstanding
FCCBs, aggregating to US$ 25.69 million (Rs 11,409.52 lakhs) including
yield-to-maturity, on the due date i.e. November 03, 2010.
Stores and Spares), Bills Receivable, Book Debts & all other movable
property both present and future excluding such movables as may be
permitted by the Banks/ Financial Institutions from time to time and by
second charge on immovable properties after charges created/to be
created on immovable assets in favour of Financial Institutions/Banks
for securing term loans. The borrowings from banks are additionally
secured by personal guarantee of Shri K Raghavendra Rao, Chairman &
Managing Director of the Company
3. The accounts of Bexel Pharmaceuticals Inc., a subsidiary of the
Company has been on the basis of Development Stage Company The Company
will provide adequate financing to fund the ongoing projects during
2012-13 for a sum not exceeding Rs 15 crores.
The accounts of Diakron Pharmaceuticals Inc., a subsidiary of the
Company has been on the basis of Development Stage Company. The Company
will provide adequate financing to fund the ongoing projects during
2012-13 for a sum not exceeding Rs 10 crores.
4. AMOUNTS DUETO MICRO, SMALL AND MEDIUM ENTERPRISES
The Identification of Micro, Small and Medium Enterprises Suppliers as
defined under "The Micro, Small and Medium Enterprises Development Act
2006"is based on the information available with the management. As
certified by the Management, the amounts overdue as on March 31, 2012
to Micro, Small and Medium Enterprises on account of principal amount
together with interest, aggregate to Rs Nil (Previous year Nil).
In accordance with Clause 29 of Accounting Standard (AS22) Deferred tax
Assets and Deferred tax Liabilities have been setoff. Deferred tax
assets in respect of unabsorbed depreciation and losses under tax laws
have been recognised in view of the continued and consistant
profitability of the Company.
5. SEGMENTAL REPORTING
The Company was disclosing segment information classifying the business
as Bulk drugs and Formulations till the financial year 2004- 05.
However in view of integration of bulk actives and formulations
business, with the commissioning of Generics formulation facilities
from the financial year 2005-06, the Company considers the business as
one interrelated and integrated business of'Pharmaceutical products "and
hence no separate segmental reporting is provided.
6. DISCLOSURE AS REQUIRED BY ACCOUNTING STANDARD 15 (REVISED) ON
EMPLOYEE BENEFITS
A) Defined Contribution Plan
i) The Company contributes 12% of the salary for all eligible employees
towards provident fund managed by the Central Government.
ii) The Company also contributes a certain percentage of salary for all
eligible employees in managerial cadre towards Superannuation Funds
managed by Life Insurance Corporation of India.
7. The Government of India, Ministry of Corporate Affairs has issued
a notification under Section 211(4) of Companies Act, 1956 dated
February 08,2011 exempting the disclosure of the quantitative details
in compliance of Paras 3(i)(a), 3(ii)(a), 3(ii)(b) and 3(ii)(d) of Part
II of Schedule VI of the Companies Act, 1956.
8. The Company has paid managerial remuneration to its Chairman and
Managing Director, and Whole time Director amounting to Rs 657.80 lakhs
The said remuneration in respect of the Chairman and Managing Director
exceeds the limit prescribed under Schedule XIII by Rs 196.31 lakhs.The
excess remuneration paid is subject to the approval of the members in
General Meeting and from the Central Government.
9. Extraordinary item -net of tax represents write back of certain
provisions made for rebates and discounts as the amounts have been
fully realised during the year.
10. Previous year's figures have been re-grouped wherever necessary to
conform to current year's classification.
Mar 31, 2011
1) Non - Monetary foreign currency items are carried at cost
2) All inter-related transactions are recognised at common rates.
3) Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of transaction.
4) Monetary items denominated in foreign currencies at the year end are
restated at year end rates. In case of items which are covered by
forward exchange contracts, the difference between the year end rate
and the rate on the date of the contract is recognised as exchange
difference and the premium paid on forward contracts is recognised over
the life of the contract.
The Company has exercised the option provided under the amendment to
the Companies (Accounting Standards) Amendment Rules, 2006 dated March
31, 2009 (AS 11). (a) amount remaining unamortised in the financial
statements as on March 31, 2011 is Nil (previous year (Rs 1,761.47
lakhs)) (b) The value of fixed assets adjusted for exchange gain is Rs
63.27 lakhs (Previous year Loss of Rs 775.05 lakhs) resulting in
depreciation amount being less by Rs 2.58 lakhs (Previous year more by
Rs 29.08 lakhs) (c) profit for the year is higher by Rs 3,459.67 lakhs
(Previous year - loss lower by Rs 11,791.12 lakhs).
j) Subsidy on Fixed Assets
Subsidy received on fixed assets is credited to the cost of respective
fixed assets.
5. The Company has filed an appeal against the demand made by the
Income Tax department amounting to Rs Nil (Previous year Rs 98.94
lakhs). No provision has also been made for demand of interest
amounting to Rs Nil (Previous year Rs 68.88 lakhs) as petition has
already been filed for waiver of interest.
6. Foreign Currency Convertible Bonds (FCCBs) :
a) The Company raised FCCBs during 2006-07 aggregating to US$ 175
million (Rs 77,358.75 lakhs) with an option to the investor to convert
the FCCBs into equity shares of the Company at an initial conversion
price of Rs 348.335 per share at a fixed rate of exchange on conversion
Rs 43.93 = US$ 1, at any time after April 9, 2007 and prior to February
18, 2012. Further the Company has an option of early redemption of
these FCCBs in whole at any time on or after February 28, 2010 and
prior to February 21, 2012, subject to certain conditions. Unless
previously converted, redeemed or repurchased and cancelled, the FCCBs
will be redeemed on February 28, 2012 at 142.77% of their principal
amount.During the year 2008-09, the Company bought back FCCBs to the
extent of US$ 37.80 million and the outstanding FCCBs as at March 31,
2009 was US$ 137.20 million.
During the year 2009-10, the Company bought back FCCBs to the extent of
US$ 19.778 million. The outstanding FCCBs as at March 31, 2011 is US$
117.422 million.
b) The Company raised FCCBs during the year 2005-06 aggregating to US$
42.50 million (Rs 19,284.50 lakhs) including a green shoe option of US$
5 million (Rs 2,289.50 lakhs) with an option to the investor to convert
the FCCBs into equity shares or global depository receipts at an
initial conversion price of Rs 243.80 per share at a fixed rate of
exchange on conversion Rs 44.94 = US$ 1. Out of the above, FCCBs
amounting to US$ 22.79 million (Rs 10,241.82 lakhs) have been so far
converted.
During 2008-09, the Company bought FCCBs to the extent of US$ 2.25
million and the outstanding FCCB's as at March 31, 2010 is US$ 17.46
million. During the year 2010-11, the Company redeemed the outstanding
FCCBs, aggregating to US$ 25.69 million (Rs 114.10 crore) including
yield-to-maturity, on the due date i.e. November 03, 2010.
c) Provision has already been made for the entire premium payable on
redemption of FCCBs by debiting the Securities Premium account (SPA).
In the event that the conversion option is exercised by the holder of
FCCBs in the future, the amount of premium charged to SPA will be
suitably adjusted in the respective years.
The debit to share premium account for premium on FCCBs and for issue
expenses have been made on the gross value without adjusting any tax
impact. Tax benefits accruing to the Company on account of claiming
such expenses will be credited to the SPA in the year in which the
benefit is enjoyed by the Company.
The provision for premium on redemption of FCCBs debited to SPA is
being restated at the exchange rate prevailing at the year end and the
gain of Rs 288.73 lakhs (Previous year Rs 3,584.88 lakhs) on account of
such restatement during the year is adjusted to the security premium
account.
d) Even though the Company has provided for the premium on redemption
of FCCBs as per note [c] above, the Company also makes provision for
dividend in the books of account on the equity shares to be allotted
upon conversion of FCCBs outstanding as at respective year end. Since
the Company is obliged, as per SEBI guidelines, to pay dividend to
those FCCBs holders who convert their FCCBs into equity after adoption
of the financial statements and upto the book closure date.
7 Amounts Due to Micro, Small and Medium Enterprises
The Identification of Micro, Small and Medium Enterprises Suppliers as
defined under "The Micro, Small and Medium Enterprises Development Act,
2006" is based on the Information available with the management. As
certified by the Management, the amounts overdue as on March 31, 2011
to Micro, Small and Medium Enterprises on account of principal amount
together with interest, aggregate to Rs Nil (Previous year Nil).
8 Excise duty on finished goods has been accounted on removal of goods
from factory,wherever applicable. Finished goods at factory have been
valued at cost exclusive of excise duty and no provision has been made
for excise duty on such goods. The above treatment has no impact on
Profit & Loss account.
Names of the related parties and description of relationship.
1. Subsidiary
Orchid Europe Limited, UK
Orchid Pharmaceuticals Inc., USA
Orgenus Pharma Inc., USA(Subsidiary of Orchid Pharmaceuticals Inc.,
USA.)
Orchid Pharma Inc / Karalex Pharma USA, (Subsidiary of Orchid
Pharmaceuticals Inc., USA)
Orchid Research Laboratories Ltd., India (ORLL)
Orchid Pharmaceuticals SA (Proprietary) Limited, South Africa (OPL, SA)
Bexel Pharmaceuticals Inc., USA
Diakron Pharmaceuticals Inc., USA
Orchid Pharma Japan KK
2. Joint Venture NCPC Orchid Pharmaceuticals Company Limited, (NCPC,
China)
3. Key Management Personnel Mr. K Raghavendra Rao, Chairman & Managing
Director
Mr. S Krishnan, Executive Director & CFO
4. Relatives of Key Management Personnel
Mrs. R Vijayalakshmi (wife of Mr. K Raghavendra Rao)
Ms. R Divya and Ms. R Sowmya (daughters of Mr. K Raghavendra Rao)
5. Companies in which relatives of Key Management personnel exercise
significant influence.
Spectrasoft Technologies Limited, India (Spectrasoft)
All whole time directors have been considered as Key Management
Personnel as they are involved in planning, directing and controlling
the activities of the reporting enterprise.
9 In terms of the resolution passed by the Company at the EGM dated
October 21,1999 Employee Stock Option Scheme was extended to the
employees of the Company. Accordingly options totalling 15,00,000 Nos
were given to the employees as per the scheme formulated under
"ORCHID-ESOP 99" scheme by the Compensation committee of the Board of
Directors. Each option is convertible into one equity share of Rs 10/-
each at a price of Rs 243.35 including premium for 6,00,000 Nos, Rs 252
including premium for 3,07,925 Nos, Rs 300.65 including premium for
2,92,075 nos and Rs 339.25 including premium for 3,00,000 nos.
A fair and reasonable adjustment in share price/ the number of options
outstanding was made by the Company in respect of the Employee Stock
Options granted but not exercised by the Employees due to the corporate
actions of issue of bonus shares during October 2005. The total number
of options outstanding and the price was adjusted so that the total
value and options available to each option holder remained the same.
Consequently the revised and adjusted prices per share are Rs 162.24
(Rs 243.35), Rs 168.00 (Rs 252.00) and Rs 200.44 (Rs 300.65)
respectively for 6,00,000 Nos, 3,07,925 Nos and 2,92,075 Nos of options
granted by the Company.
For the 3,00,000 options granted during April 2006 at a price of Rs
339.25, the Compensation Committee of the Board of Directors considered
repricing of the options in the interest of the employees, due to the
fall in the price of the shares of the Company and accordingly approved
a repricing of the options from Rs 339.25 to Rs 193.25 as per the
closing price of Orchid at National Stock Exchange on August 11, 2006.
The revision in the price has been approved by the shareholders at the
Annual General Meeting held on July 19, 2007.
2,60,489 Options (net of lapsed options) were outstanding as at March
31, 2010 including the additional number of options adjusted, due to
the bonus issue under ORCHID-ESOP 99 scheme.
During 2010-11, the outstanding 2,60,489 Options got lapsed.
In terms of the resolution passed by the Company at the AGM dated July
18, 2005 the shareholders approved the scheme formulated under
"ORCHID-ESOP 2005" for allotting 10,00,000 Nos. Accordingly 6,10,000
options were given to the eligible directors and employees by the
compensation committee of the Board of Directors at a meeting held on
August 12, 2006. Each option is convertible into one equity share of Rs
10/- each at a price of Rs 193.25 per share including premium.
66,300 Options (net of lapsed options) were outstanding as at March 31,
2010 under ORCHID-ESOP 2005 Scheme.
During the year 2010-2011, the outstanding 66,300 Options got lapsed.
In terms of the resolution passed by the Company at the AGM dated July
21, 2010 the shareholders approved the scheme formulated under
"ORCHID-ESOP 2010" for allotting 10,00,000 options. Accordingly
9,01,000 options were given to eligible Employees, including the
Executive Director except the Promoter Director by the Compensation
committee of the Board of Directors at a meeting held on October 28,
2010. Each option is convertible into one equity share of Rs 10/- each
at a price of Rs 329.55 per share, being the closing share price of
Orchid in the National Stock Exchange on October 27, 2010, the day
prior to the date of the meeting. 8,98,000 Options were outstanding as
at March 31, 2011 under ORCHID-ESOP 2010 Scheme.
No entries were passed in the books as the options were given at the
market prices prevailing on the date of issuance of options.
10 During the 4th quarter of the FY 2009-10, Orchid completed the
transaction for sale and transfer of its generic injectable finished
dosage form pharmaceuticals business to Hospira. The sale and transfer
transaction included Orchid's betalactam antibiotics injectables
manufacturing complex and formulations R&D facility at Irungattukottai,
Chennai as well as its generic injectable product portfolio and
pipeline. The human resource base related to the transferred business
also moved to the new entity.
11 a) Current tax includes Rs 122.70 lakhs (previous year Rs Nil)
relating to prior years. b) Deferred Tax liability represents the
following
Provision for Deferred tax for the year Rs (925.38) lakhs (Previous
year Rs 7431.74 lakhs)
12 Segmental Reporting
The Company was disclosing segment information classifying the business
as Bulk drugs and Formulations till the financial year 2004- 05.
However in view of integration of bulk actives and formulations
business, with the commissioning of Generics formulation facilities
from the financial year 2005-06, the Company considers the business as
one interrelated and integrated business of "Pharmaceutical products"
and hence no separate segmental reporting is provided.
13 Disclosure as required by Accounting Standard 15 (Revised) on
Employee Benefits A Defined Contribution Plan
i) The Company contributes 12% of the salary for all eligible employees
towards provident fund managed by the Central Government.
ii) The Company also contributes 15% of salary, subject to a maximum of
Rs 1,00,000, for all eligible employees in managerial cadre towards
Superannuation Funds managed by Life Insurance Corporation of India
14 The bad and doubtful debts include value of debts amounting to Nil
(Previous year Rs 1,615.11 lakhs) written off against the provision
already made in earlier years.
15 The Government of India, Ministry of Corporate Affairs has issued a
notification under section 211(4) of the Companies Act, 1956 dated
February 8, 2011 exempting the disclosure of the quantitative details
in compliance of Paras 3(i)(a), 3(ii)(a), 3(ii)(b), and 3(ii)(d) of
Part II of Schedule VI of the Companies Act, 1956.
16 Previous year's figures have been re-grouped wherever necessary to
conform to current year's classification.
Mar 31, 2010
1 Sales tax recoverable has been recorded on the basis of the claims
submitted or in the process of being submitted, as per rules relating
to EOU and which in the opinion of the Company are recoverable.
2 The Company has filed an appeal against the demand made by the Income
Tax department amounting to Rs 98.94 lakhs-(Previous year Rs 98.94
lakhs). No provision has been made as the Company is confident of
winning the appeal. No provision has also been made for demand of
interest amounting to Rs 68.88 lakhs (Previous year Rs 68.88 lakhs) as
petition has already been filed for waiver of interest.
3 Amounts Due to Micro, Small and Medium Enterprises
The Identification of Micro, Small and Medium Enterprises Suppliers as
defined under "The Micro, Small and Medium Enterprises Development Act
2006" is based on the Information available with the management. As
certified by the Management, the amounts overdue as on 31st March 2010
to Micro, Small and Medium Enterprises on account of principal amount
together with interest, aggregate to Nil (Previous year Nil).
4 Excise duty on finished goods has been accounted on removal of goods
from factory,wherever applicable. Finished goods at factory have been
valued at cost exclusive of excise duty and no provision has been made
for excise duty on such goods. The above treatment has no impact on
Profit & Loss account.
5 In terms of the resolution passed by the Company at the EGM dated
October 21,1999 Employee Stock Option Scheme was extended to the
employees of the Company. Accordingly options totalling 1,500,000 Nos
were given to the employees as per the scheme formulated under
ÃORCHID-ESOP 99" scheme by the Compensation committee of the Board of
Directors. Each option is convertible into one equity share of Rs 10
each at a price of Rs 243.35 including premium for 600,000 Nos, Rs 252
including premium for 307,925 Nos, Rs 300.65 including premium for
292,075 nos and Rs 339.25 for 300,000 nos. No entries were passed in
the books as the options were given at the market prices prevailing on
the date of issuance of options.
A fair and reasonable adjustment in share price/ the number of options
outstanding was made by the Company in respect of the Employee Stock
Options granted but not exercised by the Employees due to the corporate
actions of issue of bonus shares during October 2005. The total number
of options outstanding and the price was adjusted so that the total
value and options available to each option holder remained the same.
Consequently the revised and adjusted prices per share are Rs 162.24
(Rs 243.35), Rs 168.00 (Rs 252.00) and Rs 200.44 (Rs 300.65)
respectively for 600,000 Nos, 307,925 Nos and 292,075 Nos of options
granted by the Company. For the 300,000 options granted during April
2006 at a price of Rs 339.25, the Compensation Committee of the Board
of Directors considered repricing of the options in the interest of the
employees, due to the fall in the price of the shares of the Company
and accordingly approved a repricing of the options from Rs 339.25 to
Rs 193.25 as per the closing price of Orchid at National Stock Exchange
on August 11, 2006. The revision in the price has been approved by the
shareholders at the Annual General Meeting held on July 19, 2007.
260,489 Options (net of lapsed options) were outstanding as at March
31, 2010 including the additional number of options adjusted, due to
the bonus issue under ÃORCHID-ESOP 99Ã scheme.
In terms of the resolution passed by the Company at the AGM dated July
18, 2005 the shareholders approved the scheme formulated under
ÃORCHID-ESOP 2005Ãfor allotting 1,000,000 Nos. Accordingly 610,000
options were given to the eligible directors and employees by the
Compensation Committee of the Board of Directors at a meeting held on
August 12, 2006. Each option is convertible into one equity share of Rs
10 each at a price of Rs 193.25 per share including premium. 66,300
Options (net of lapsed options) were outstanding as at March 31, 2010
under ORCHID ESOP 2005 Scheme.
6 During the 4th quarter of the fiscal under review, Orchid completed
the transaction for sale and transfer of its generic injectable
finished dosage forms pharmaceuticals business to Hospira. The sale and
transfer transaction included OrchidÃs betalactam antibiotics
injectables manufacturing complex and formulations R&D facility at
Irungattukottai, Chennai as well as its generic injectable product
portfolio and pipeline. The human resource base related to the
transferred business also moved to the new entity.
7 Segmental Reporting
The Company was disclosing segment information classifying the business
as Bulk drugs and Formulations till the financial year 2004- 05.
However in view of integration of bulk actives and formulations
business, with the commissioning of Generics formulation facilities
from the financial year 2005-06, the Company considers the business as
one interrelated and integrated business of "Pharmaceutical products"
and hence no separate segmental reporting is provided.
8 A Defined Contribution Plan
i) The Company contributes 12% of the salary for all eligible employees
towards provident fund managed by the Central Government.
ii) The Company also contributes a certain percentage of salary for all
eligible employees in managerial cadre towards Superannuation Funds
managed by Life Insurance Corporation of India.
9 The bad and doubtful debts includes value of debts amounting to Rs
1,615.11 lakhs written off and adjusted against the provision made in
earlier years.
10 The Company has made an application under Section 211(4) of the
Companies Act, 1956 seeking exemption on the disclosure of the
quantitative details in compliance of Paras 3(i)(a), 3(ii)(a),
3(ii)(b), and 3(ii)(d) of Part II of Schedule VI of the Companies Act,
1956 and pending receipt of the approval, the disclosures have been
made in the same manner stipulated by the Department of Company Affairs
while granting exemption from disclosure in earlier year
11 Sundry Debtors shown in the Balance sheet are subject to
confirmations. The Company has sold its sterile injectable business to
Hospira Healthcare India Private Limited during the year. Consequent to
the sale of undertaking the company has terminated the dealings with
some of the customers in regulated markets. The Company has received
additional claims on account of such transfer for discounts and rebates
and the customers are not confirming the balances subject to
finalisation of settlement of claims. The Company has provided for an
amount of Rs 80 crores for such claims during the year in addition to
the provision made during the previous year of Rs 40 crores. The
management is confident that the provisions so far made is adequate to
cover all such claims.
12 Previous years figures have been re-grouped wherever necessary to
conform to current years classification.