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Notes to Accounts of Panacea Biotec Ltd.

Mar 31, 2023

(a) The Company has neither bought back any equity shares nor issued any equity shares as bonus or for consideration other than cash, during the period of five years immediately preceding the reporting date.

(b) Terms attached to 0.5% cumulative non-convertible and non-participating redeemable preference shares:

The Company has only one class of preference shares having a par value of ''10 per share. The Company declares and pays dividends in Indian Rupees. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board of Directors has not proposed any dividend for current year and previous year.

The preference shares were initially issued for a period of 10 years w.e.f. January 6, 2015. The terms of preference shares were amended on April 8, 2019 so as to enhance the tenure from 10 years to 15 years with an option with the Company as well as preference shareholders for early redemption of preference shares, provided the secured debt obligations with respect to debentures issued by the Company are fully serviced as per the agreed terms. The said debentures were assigned and novated in favour of Panacea Biotec Pharma Limited in financial year 2019-20 and have subsequently been fully redeemed during financial year 2021-22.

In the event of liquidation of the Company, the holders of preference shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in preference to the equity shareholders. The distribution will be in proportion to the number of preference shares held by the preference shareholders. Also refer note 17(iii).

Nature and purpose of other reserves:

General reserve: The Company has transferred a portion of the net profit before declaring dividend to general reserve pursuant to the provisions of the erstwhile Companies Act, 1956. Mandatory transfer to general reserve is not required under the Act.

Securities premium: Represents premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Act. Retained earnings: are the profits/(losses) that the Company has earned till date, less any transfer to any reserves, dividend or other distribution paid to shareholders.

Capital redemption reserve: Created in accordance with provisions of the Act in connection with the buy back of equity shares from the market. Capital reserve: Created pursuant to the transfer of pharmaceutical business to PBPL and demerger of the real estate business.

a) The Company has recognized deferred tax assets to the extent that management is reasonably certain that the same would be available for adjustment against foreseeable tax profit. The Company has unabsorbed business losses and unabsorbed depreciation as per tax laws for ''1,322.18 million and for ''253.05 million respectively as at March 31,2023 (March 31,2022: ''1,085.49 million and for ''147.96 million respectively) that is available for off-setting against the future taxable profits of the Company. The unabsorbed business losses can be carried forward for a period of eight years from the date of incurrence of such losses as per tax laws. These unabsorbed business losses will expire in financial year ending March 31, 2025, March 31, 2026 and March 31, 2030.

Notes :

i) Includes income tax demand of ''162.22 million in respect to Assessment Year 2005-06. The Income Tax Department had issued alleged demand based on certain grounds related to purchases made by the Company from an overseas vendor. The matter was decided in favour of the Company and the demand was cancelled by CIT (Appeals). However, the Income Tax Department has filed an appeal before Income Tax Appellate Tribunal (ITAT) against the order of CIT (Appeals) which is pending at present. The Company believes that it has merit in this case, hence no provision is required.

ii) A search operation was conducted by the Income Tax Department in the premises of the Company in January 2012 and hence the Company had re-filed the income tax returns for the Assessment Year 2006-07 to 2012-13. During the year ended March 31,2015, the Income Tax Department completed the assessment of the said years, disallowed certain expenses and issued demand of ''3,294.90 million (including interest) on various grounds. The Company preferred appeals before the CIT (Appeals) against the orders of the Income Tax Department. The appeals were decided in favour of the Company and the demand was cancelled. However, CIT (Appeals) has made certain disallowances with respect to Assessment Year 2010-11 and 2011-12 against which the Company has filed appeals before the Income Tax Appellate Tribunal (ITAT). The Income Tax Department has also filed appeals before ITAT against the orders of CIT (Appeals). The appeals before ITAT are pending at present. Based on legal advice, the Company believes that it has merits in these cases, hence no provision is required.

iii) The Income Tax Department has raised a demand of ''33.69 million in respect of Assessment Year 2016-17 based on transfer pricing order passed by Dispute Resolution Panel. The alleged demand was raised on purchase of certain goods by the Company from its associated enterprise wherein, according to Income Tax Department, arms length price adjustment was warranted. The company has filed appeal before Income Tax Appellate Tribunal against the order passed by the Income Tax Department. The Company believes that it has merits in this case, hence no provision is required.

iv) The Income Tax Department has levied a penalty of ''0.40 million in respect of Assessment Year 2017-18 on account of additions made in assessment order passed for the said year. The company has filed an appeal before CIT (Appeals) against the order passed by the Income Tax Department. The Company believes that it has merits in this case, hence no provision is required.

v) The Income Tax Department has raised a demand of ''2,620.80 million in respect of Assessment Year 2020-21. The alleged demand was raised due to wrong addition of contingent liability not provided for, set-off of business losses not allowed and increase in other income due to set-off of business losses not allowed. The company has filed an appeal before Commissioner of Income Tax (Appeals) and rectification application before assessing officer against the order passed by the Income Tax Department. The Company believes that it has merits in this case, hence no provision is required.

vi) The Income Tax Department has raised a demand of ''0.90 million in respect of Assessment Year 2018-19 on the ground of non-deduction of withholding tax on certain foreign remittances made by the company during the year. The company has filed an appeal before Commissioner of Income Tax (Appeals) against the order passed by the Income Tax Department. The Company believes that it has merits in this case, hence no provision is required.

vii) In respect of custom duty demand, the Assessing Officer levied custom duty on certain exempted items imported by the Company. The Company has deposited the entire amount of demand under protest amounting to ''4.00 million and the matter was pending before the Customs, Excise and Service Tax Appellate Tribunal ("CESTAT”). On October 28, 2022 CESTAT has issued order in favour of the Company with consequential benefits.

viii) In respect of Sales tax / VAT demands for Chennai, Kolkata, Patna and Pune, the Sales Tax Department has disallowed certain claims / deductions in the form of credit notes and clarifications submited at the time of Assessments. The Company believes that it has merit in these cases and hence no provision is required.

ix) The Company had manufactured and offered supply of certain vaccines which were manufactured against the confirmed order received from the Ministry of Health and Family Welfare ("MOHFW") Govt. of India. Some quantities of vaccines were supplied during December 2011, the balance could not be supplied in view of disputes with respect to delivery dates and in the meantime the stock of such vaccines amounting to ''74.10 million expired. Further, the Company had also received an advance market commitment ("AMC") amounting to ''100.00 million

against these vaccines. The refund of the advance so received (after adjusting the amount receivable against the vaccines already supplied) was demanded back by MOHFW along with interest on account of non-supply of balance quantities of vaccines. In view of above disputes, the Company obtained a stay order from the Hon''ble Delhi High Court against recovery of said amount, till the disputes are finally resolved through arbitration. The arbitration award was pronounced in favour of the Company on March 14, 2019, vide which MOHFW was directed to pay the applicable amount for vaccine supplied/offered for supply along with interest. MOHFW has filed an appeal before Hon''ble Delhi High Court raising certain objections against the award, which was dismissed by the Hon''ble Court. MOHFW has filed an appeal against such order before the Division Bench of the Hon''ble Delhi High Court which is currently pending before the same. The Company''s application for execution of award is currently pending before the Hon''ble Delhi High Court. The Company believes that it has merits in this case and the outcome of this matter will not have any material adverse impact on the financial position of the Company.

x) The Company has received notices from various authorities seeking information mentioned in the said notices. In view of the management these notices may not have any financial liability on the Company.

39. Leases

Company as a lessee:

The Company does not have any long-term non cancellable leases. As on April 1,2019, leasehold land has been transferred to Right of Use ("RoU") asset. Refer note 2.1 for details. As there were no lease commitments as at March 31,2019, hence disclosures related to reconciliation of total lease commitments as at March 31, 2019 to the lease liabilities recognised at April 1, 2019 is not applicable.

The Company does not have any long-term non cancellable leases as at March 31,2023 (March 31,2022: Nil)

Company as a lessor:

Operating leases

The Company has entered into operating leases on its investment property portfolio consisting of certain offices, guest house, warehouse, manufacturing buildings etc. These leases generally have terms of 11 months. All leases generally include a clause for upward revision of the rental charge by 5% on an annual basis according to prevailing market conditions. Rental income recognised by the Company from above said lease agreements is ''27.74 million (March 31,2022: ''36.45 million).

Gratuity (funded)

The Company provides for gratuity for employees in India as per the Payments of Gratuity Act, 1972 to employees who are in continuous service for a period of 5 years. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. For the funded plan, the Company makes contributions to recognised funds in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

The weighted average duration of the defined benefit obligation as at March 31,2023 is 13.27 years (March 31,2022: 13.65 years).

The Company expects to contribute ''16.90 million (March 31,2022: ''15.34 million) towards gratuity during next year.

B. Defined contribution plans

The Company''s contribution to state governed provident fund, employees'' state insurance and labour welfare fund schemes are considered as defined contribution plans. The contribution for the current year is ''21.75 million (March 31, 2022: ''20.42 million) and under the schemes is recognised as an expense, when an employee renders the related service. There are no other obligations of the Company, other than the contribution payable to the respective funds.

B.2 Financial assets and liabilities are measured at amortised cost. All the financial assets and liabilities valued at amortised cost form part of Level 3 of hierarchy table. Further, the carrying amounts of trade receivables, cash and cash equivalents, consignment debtors, interest accrued, other receivables, other bank balances, trade payables, employee payables and other current payables are considered to be the same as fair values, due to their short term nature. The fair value of all financial assets and financial liability, approximates the amortised cost due to their short term nature. They are classified as level 3 fair value in the fair value hierarchy due to the inclusion of unobservable inputs, including own credit risk. The fair value of loans to employees and security deposits approximates the carrying amount.

45. Financial risk management

Risk management framework

The Company''s activities expose it to market risk, liquidity risk and credit risk. The management has the overall responsibility for the establishment and oversight of the Company''s risk management framework. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.

A. Credit risk

Credit risk is the risk that a counter party fails to discharge its obligation to the Company. The Company''s exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counter parties and incorporates this information into its credit risk controls.

A.1 Credit risk management

The Company assesses and manages credit risk based on internal credit rating system. Internal credit rating is performed for each class of financial instruments with different characteristics. The Company assigns the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets:

Based on business environment in which the Company operates, a default on a financial asset is considered when the counter party fails to make payments within the agreed time period as per contract. Loss rates reflecting defaults are based on actual credit loss experience and considering differences between current and historical economic conditions.

Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or a litigation decided against the Company. The Company continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognised in statement of profit and loss.

Cash and cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country.

Trade receivables

Credit risk related to trade receivables are mitigated by taking bank guarantees/letter of credit, from customers where credit risk is high. The Company closely monitors the credit-worthiness of the debtors through internal systems that are configured to define credit limits of customers, thereby limiting the credit risk to pre-calculated amounts. The Company assesses increase in credit risk on an ongoing basis for amounts receivable that become past due and default is considered to have occurred when amounts receivable become two year past due.

Other financial assets measured at amortised cost

Other financial assets measured at amortized cost includes, security deposits and others. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously.

A.2 Expected credit losses for financial assets other than trade receivables

The Company provides for expected credit losses on loans and advances other than trade receivables by assessing individual financial instruments for expectation of any credit losses. Since the Company deals with only high-rated banks and financial institutions, credit risk in respect of cash and cash equivalents, other bank balances and bank deposits is evaluated as very low. In respect of loans, comprising of security deposits, credit risk is considered low because the Company is in possession of the underlying asset. However, in respect of loans comprising loans to related parties, credit risk is evaluated on the basis of credit worthiness of those parties and loss allowance is measured as lifetime expected credit losses. In respect of other financial assets, credit risk is evaluated based on Company''s knowledge of the credit worthiness of those parties and loss allowance is measured as lifetime expected credit losses. The Company does not have any expected loss based impairment recognised (except in case of loans to related parties) on such assets considering their low credit risk nature, though incurred loss provisions are disclosed under each sub-category of such financial assets.

A.3 Expected credit loss for trade receivables under simplified approach

The Company recognizes lifetime expected credit losses on trade receivables using a simplified approach, wherein the Company has defined percentage of provision by analysing historical trend of default relevant to each category of customer based on the criteria defined above and such provision percentage determined have been considered to recognise life time expected credit losses on trade receivables (other than those where default criteria are met). The Company has other trade receivables for ''3.19 million (March 31, 2022: ''147.51

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due. The Company manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash-outflows due in day-to-day business. Long-term liquidity needs for a 180-day and a 360-day lookout period are identified monthly.

Management monitors rolling forecasts of the liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates.

B.1 Contractual maturities of financial liabilities

The tables below analyse the Company''s financial liabilities based on their contractual maturities. The amounts disclosed in the table are the contractual undiscounted cash flows.

(I) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rate related primarily to the Company''s non-current and current debt obligations financed with fixed interest rate. The Company always try to ensure minimum cash outlfows. The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility. Accordingly, the Company is not exposed to fluctuations in interest rate risk on borrowings.

(II) Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the United States Dollar (USD), EURO, Swiss Franc (CHF), Japanese Yen (JPY), Canadian Dollar (CAD), Pound Sterling (GBP), Kazakhstani Tenge (KZT), Russian Rouble (RUB), Swedish Krona (SEK) and Thai Baht (THB). Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the functional currency of the Company. The Company does not use any derivative instruments to manage its exposure. Also, the Company does not use forward contracts and swaps for speculative purposes.

46. Capital management policies

The Company''s capital management objectives are to ensure the Company''s ability to continue as a going concern as well as to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The Company monitors capital on the basis of the carrying amount of equity plus its subordinated loan, less cash and cash equivalents as presented on the face of the statement of financial position recognised in other comprehensive income.

The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The amounts managed as capital by the Company are summarised as follows:

48. (a) The Board of Directors of the Company and Panacea Biotec Pharma Limited (""PBPL"") in their respective meetings held on February 01,

2022, have approved sale of PBPL''s pharmaceutical formulations brands in India and Nepal including related trademarks, copyrights etc., including identified employees to Mankind Pharma Limited (the "Buyer”) for a consideration of ''18,720.00 million plus applicable taxes. The said transaction was approved by the shareholders of PBPL and the Company in their respective meetings held on February 23, 2022 and February 26, 2022 respectively. Subsequently, the Company and PBPL signed the Definitive Agreements including the asset purchase agreement with the Buyer on February 28, 2022. Out of the total consideration, PBPL has recognised revenue of ''1,026.61 million (March 31,2022: ''16,762.06 million) which is shown as an "Exceptional Item” in the Statement of Profit and Loss of PBPL and Consolidated Statement of Profit and Loss of the Group. The remaining consideration of ''931.33 million (March 31,2022: ''1,957.94 million) would be recognised as revenue in subsequent years and is shown as Contract Liability in the financial statement of PBPL and consolidated financial statements of the Group.

(b) On March 03, 2022, PBPL had repaid ''10,980.77 million to redeem its outstanding liability of non-convertible debentures (''NCDs'') of ''7,544.45 million along with a redemption premium of ''3,436.32 million. Consequently, PBPL became a debt free Company. Subsequently, the mortgage and hypothecated charge created earlier in favor of Vistra (ITCL) India Limited (acting as trustee on behalf of debenture holders) to secure the aforesaid NCDs, which includes the guarantees issued by the Company, it''s promoters and directors had been released.

49. For the financial year ended March 31,2023, the Company has incurred loss (before tax and exceptional items) of ''627.52 million (year ended March 31, 2022: loss of ''935.76 million). The Company has already taken various measures aimed at improving the financial condition of the Company, inter-alia, sale of pharmaceutical brands, as explained in Note 48 above, which enabled the Group to repay its outstanding dues of Non-Convertible Debenture (NCDs) and retain sufficient surplus to fund its existing projects and operations and also help the Group to enter new market and expediting development of new products. The surplus funds with the Group has also strengthened the working capital position and has helped/ will help scaling up its pharmaceutical formulations business in international markets including ROW countries, USA / EU, etc. and to pursue other business opportunities. The Company has already received higher long-term awards from UNICEF and PAHO for supply of pentavalent vaccine to these institutions. Based on these measures and continuous efforts to improve the business performance, the management has prepared the financial statements on going concern basis.

50. (a) In view of the Company''s decision to make the structure of overseas subsidiaries more efficient and aligned to business objectives and to

save management and administrative expenses thereof, the Company has decided to wind up Panacea Biotec (International) SA ("PBS”) in due course. Accordingly, the Company has created ''Provision for impairment on its investment in PBS. Owing to accumulated losses in PBS and its wholly-owned subsidiary, Panacea Biotec Germany GmbH (PBGG), the Company has continued to maintain the provision for bad and doubtful advances in respect of the loans receivable and accrued interest from PBS and PBGG also amounting to ''96.78 million and ''319.42 million, respectively, as on March 31, 2023 (March 31, 2022: ''96.78 million and ''319.42 million, respectively). Considering the doubtful nature of recovery, the Company has not accounted for any interest income on loans given to these subsidiaries and consequently not provision for doubtful advances has been created during the financial year 2022-23.

(b) The Company has applied with the authorized dealer to seek permission from Reserve Bank of India for writing off an amount of ''585.16 million which was receivable from the Company''s wholly owned subsidiary Rees Investment Ltd., which was compulsory liquidated and dissolved by the authorities of Guernsey on May 23, 2019. Pending such approval, the Company is continuing to maintain the provision for bad and doubtful advances of ''585.16 million (March 31,2022: ''585.16 million) in respect of the loan and accrued interest receivable from Rees.

51. Under the collaboration with the Limited Liability Company "Human Vaccine”, an indirect wholly-owned subsidiary of Joint Stock Company "Management Company of Russian Direct Investment Fund” for manufacture of Covid-19 vaccine using the technology to be provided by Human Vaccine, the Company had received from Human Vaccine an advance amount of US$ 7.00 million out of which ~US$ 6.58 million was used to meet the expenses relating to Sputnik-V and Sputnik Light vaccine project. Due to the failure on the part of Human Vaccine to demonstrate and transfer the technology and certain other reasons beyond the control of the Company, the complex process of technology transfer and manufacture of Sputnik-V vaccine could not be completed successfully and the contract stood frustrated and accordingly both the parties stood automatically discharged from their contract by operation of law. In view of the fact that the Company has already incurred huge expenses on the said project and also received the advance from Human vaccine, it has been decided to adjust the said advance against such expenses. The Company has already conveyed its decision to Human Vaccine and provided relevant details / documents pertaining to the said expenses. The Company has received legal advice from its counsel and believes that it will not be liable to pay back the amount adjusted towards expenses under dispute with Human Vaccine.

52. In August 2021, the Company had entered into a Licensing and Manufacture Agreement with Human Vaccine LLC , Generium JSC and Dr. Reddy''s Laboratories Limited ("DRL"). As per the terms of the agreement, the Company was to undertake fill-and-finish activities of Sputnik-V vaccine using the ready-to-fill drug substance supplied by Generium and supply the Sputnik-V vaccine so produced to DRL. Pursuant to the said agreement, the Company received drug substance from Generium and produced around ~1.96 million doses of Sputnik-V vaccine out of which DRL purchased ~0.86 million doses only and refused to purchase and pay for the remaining ~1.10 million doses. Because of breach of their respective obligations by DRL and Generium, the pending payment of ~US$ 7.41 million for the drug substance received from Generium could not be made. After several rounds of discussion among the parties to settle the dispute amicably, Generium has filed notice of arbitration with Singapore International Arbitration Centre (SIAC) for arbitration of dispute with respect to the said pending payment and interest thereon totalling ~US$ 8.90 million. Panacea Biotec has also initiated a parallel arbitration proceeding regarding its claims against DRL, Generium and Human Vaccine and filed notice of arbitration with SIAC during the current financial year. The Company has requested SIAC for clubbing of both the arbitration proceedings together. The parties have agreed for appointment of sole arbitrator. Further arbitration proceedings, including appointment of sole arbitrator and filing of pleadings, shall commence in due course. The Company has obtained legal opinion from its legal counsel who, considering the nascent stage of the proceedings, have opined that (a) the Company has a reasonable defence against the claim brought by Generium; and (b) the possibility of the claim falling to the Company may be classified as low at this stage.

53. Additional regulatory information required by schedule III under Companies Act, 2013:

(i) The Company does not have any Benami Property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company does not have any tansactions with stuck off companies.

(iii) The Company does not have any charges or satisfaction of charge which is yet to be registered with Registrar of Companies beyond the statutory period.

(iv) The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year.

(v) The Company has not advanced or loaned to, or invested funds in, any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

- directly or indirectly lend to, or invest in, other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries); or

- provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(vi) The Company has not received any funds from any other person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

- directly or indirectly lend to, or invest in, other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party; or

- provide any guarantee, security or the like to or on behalf of the Funding Party.

(vii) The Company has not entered into any transaction which is not recorded into the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

(viii) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.

(ix) The Company has complied with the number of layers prescribed under Section 2(87) of the Act read with the Companies (Restriction on Number of Layers) Rules, 2017.

(x) No scheme of arrangements has been approved by the Competent Authority in term of sections 230 to 237 of the Companies Act, 2013, during the year.

(xi) The Company does not have any borrowings from banks or financial institutions against security of its current assets. xii) The title deeds of the immovable properties owned by the Company are held in the name of the Company.

56. The Government of India has promulgated the Code on Social Security, 2020 in financial year 2020-21, which would impact the contributions by the Company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will assess the impact and its valuation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which the Code becomes effective and the related rules to determine the financial impact are published.

57. In accordance with Ind AS 108, ''Operating Segments'', the Company has disclosed the segment information in the consolidated financial statements. Accordingly, the segment information is given in the audited consolidated financial statements of the Group for the year ended March 31, 2023.

58. 0.00 under in million” represents amount less than ''50,000 and 0.00 under units represents units less than 50,000. Further, the figures shown in the tables may not exactly add up due to rounding off. Previous year figures have been regrouped, reclassified wherever considered necessary.

59. There is no other subsequent events that occurred after reporting date.

The above notes form an integral part of the standalone financial statements.

As per our report of even date


Mar 31, 2018

* Represents deemed cost on the date of transition to Ind AS. Gross block and accumulated depreciation from the Previous GAAP have been disclosed for the purpose of better understanding of the original cost of assets.

Notes : a) Plant and equipment includes plant and machinery amounting to Rs. 0.86 million (March 31, 2017: Rs.1.30 million; April 1, 2016: Rs. 2.00 million) (net block) lying with third parties.

b) Property, plant and equipment pledged as security : Refer note 42 for information on assets pledged as security by the Company.

c) Contractual commitments : Refer note 38(B) for information on contractual commitments related to property, plant and equipment.

i) Fixed deposits amounting to Rs. 52.17 million (March 31, 2017; Rs. 45.80 million; April 1, 2016: Rs. 32.36 million) are pledged with banks and various Government authorities for tender, bank guarantee, margin money etc.

ii) Not available for use by the Company as these represent corresponding unpaid/unclaimed dividend liabilities.

16 Assets held for sale

During the year ended March 31, 2016, the Board of Directors decided to dispose off the Company''s investment in a subsidiary, namely New Rise Healthcare Private Limited to hive off the non-core operations. Consequently, the investment in the subsidiary was disclosed as ''Assets held for sale''. Further during April 2017, the Company acquired 942,980 equity shares from the minority shareholders of New Rise Healthcare Private Ltd., thereby making it a wholly owned subsidiary of the Company. Subsequently, the Company sold the entire 100% equity stake to Narayana Hrudayalaya Ltd. for an enterprise value of Rs. 1,800.00 million. The Company has incurred a loss of Rs. 450.87 million on such sale after settling all external liabilities and preferential payments. The Company had considered the net consideration realised in relation to aforesaid transaction as recoverable amount of investment as at March 31, 2017 and consequently recorded an impairment provision of Rs. 450.87 million which had been included in exceptional items in financial year 2016-17.

c) Terms/right attached to equity shares:

The Company has only one class of equity shares having a par value of Re. 1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board of Directors has not proposed any dividend for current year and previous year. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts including preference shares. The distribution will be in proportion to the number of equity shares held by the equity shareholders.

The above information has been furnished as per the shareholders'' detail available with the Company at the year end.

f) Terms attached to 0.5% cumulative non-convertible and non-participating redeemable preference shares:

The Company has only one class of preference shares having a par value of Rs.10 per share. The Company declares and pays dividends in Indian Rupees. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board of Directors has not proposed any dividend for current year and previous year.

The preference shares have been issued for a period of 10 years with an option with the Company as well as preference shareholders for early redemption of preference shares, provided CDR debts (refer note 19A) are fully serviced and the Company comes out from the purview of CDR system. In the event of liquidation of the Company, the holders of preference shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in preference to the equity shareholders. The distribution will be in proportion to the number of preference shares held by the preference shareholders.

g) Reconciliation of 0.5% cumulative non-convertible and non-participating redeemable preference shares outstanding at the beginning and at the end of the reporting financial year:

h) No equity/preference shares have been bought back or bonus share and shares have been issued for consideration other than cash during the period of five years immediately preceding the reporting date except for issue of preference shares by conversion of loan in financial year 2014-15 amounting to Rs.163,000,000.

Nature and purpose of other reserves

Equity component of compound financial instrument : Redeemable preference shares issued by the company have been classified as borrowings and recognized at amortised cost on transition date as against part of equity as per Previous GAAP. The difference on the transition date has been recognised as a separate component in other equity. Interest charge at effective interest rate on such instruments has been recognised as finance cost in subsequent periods.

General reserve : The Company has transferred a portion of the net profit before declaring dividend to general reserve pursuant to the provisions of the erstwhile Companies Act, 1956. Mandatory transfer to general reserve is not required under the Act.

Securities premium reserve : represents premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Act. Capital redemption reserve : created in accordance with provisions of the Act for the buyback of equity shares from the market.

Foreign currency monetary item translation difference account : Exchange difference arising on long term foreign currency monetary items related to foreign currency term loan.

Other comprehensive income : The Company has recognised remeasurements benefits on defined benefits plans through other comprehensive income.

Notes:

Rate of interest - The Company''s long term borrowings are at an effective weighted average rate of 11% (March 31, 2017: 11%) (April 01, 2016: 11%) per annum.

A. Loans under Corporate Debt Restructuring (CDR) (refer note 53)

1 All the long-term loans and sustainable working capital borrowings from the banks have been restructured under the CDR package approved by the Corporate Debt Restructuring Empowered Group (CDR- EG) on September 24, 2014, except foreign currency term loan from Bank of India.

2 The Company has executed Master Restructuring Agreement (MRA)/other definitive documents with all lender banks, except state bank of Travancore ("SBT"), On December 27, 2014 with cut-off date of October 01, 2013. Under the CDR package, the Company is entitled to reliefs and concessions granted by the banks, effective from the cut-off date.

3 Key terms of restructuring of the long-term loans are as under:

i. Tenure: Door to Door 10 Years.

ii. Additional moratorium of 2 years and 2 months from Cut Off Date.

iii. Repayment of loans: 32 structured quarterly instalments starting from quarter ended December 2015 till quarter ending September 2023. However, first instalment was payable on November 30, 2015 instead of December 31, 2015.

iv. Interest rate: 11% p.a. (floating), linked to base rates of respective Lenders from October 1, 2013 to September 30, 2018, thereafter rate of interest will increase to 13% p.a. linked to base rate of respective lenders w.e.f. October 1, 2018.

v. Interest obligations aggregating Rs.1,156.40 million on (i) restructured long-term loans and the foreign currency term loan from Bank of India for a period of 24 months from Cut Off Date; and (ii) sustainable working capital borrowings for a period of 12 months from Cut Off Date, were converted into Funded Interest Term Loan (FITL).

vi. The dues aggregating to Rs.842.80 million in the working capital borrowings as on the Cut Off Date were converted into Working Capital Term Loan (WCTL).

4 The foreign currency term loan (ECB) from Bank of India of US$ 25.00 million is repayable in three equal yearly instalments commencing from financial year 2017-18 onwards.

5 During financial year 2015-16, SBT had assigned all the rights, title and interest in the entire outstanding dues owed by the Company together with all the underlying securities and guarantees, comprising its Rupee term loan and sustainable working capital along with all accrued interest thereon, in favour of Edelweiss Asset Reconstruction Company Limited ("EARC"). These loans were part of CDR. EARC had restructured the entire outstanding of Rs.1,649.50 million for an aggregate principal amount of Rs.1,153.00 million (Refer note 52 and 53) . As a result of restructuring of repayment of interest and principal, total liability of Rs.1,899.94 million is repayable as per the following terms:

i. Cut Off date January 01, 2016

ii. Principal payment of Rs.30.50 million to be paid on or before January 31, 2016

iii. Balance principal amount of Rs.1,122.50 million is repayable in 29 structured quarterly instalments commencing from the quarter ending March 31, 2016 till the quarter ending March 31, 2023

iv. Interest rate shall be 11% p.a. up to September 30, 2018 and 13% p.a. thereafter up to March 31, 2023, payable on quarterly rests along with principal instalments

6 During financial year 2015-16, State Bank of Mysore ("SBM") had absolutely assigned all the rights, title and interests in financial assistance granted to the Company, with all the underlying rights, benefits and obligations in favour of EARC vide assignment agreement dated February 26, 2016 (Refer note 53). These loans were part of CDR. EARC had restructured the entire outstanding of Rs. 166.90 million for an aggregate principal amount of Rs. 140.00 million. As a result of restructuring of repayment of interest and principal, total liability of Rs. 223.30 million is repayable as per the following terms:

i. Cut Off date February 26, 2016

ii. Principal amount of Rs. 140.00 million is repayable in 28 structured quarterly instalments commencing from the quarter ending June 30, 2016 till the quarter ending March 31, 2023

iii. Interest rate shall be 11% p.a., payable on quarterly rests along with principal instalments

B. Securities for the non-current loans and sustainable working capital borrowings:

1 The long-term borrowings, except rupee term loans from BIRAC, TDB and DST have been secured by way of:

i) first pari-passu charge over entire fixed assets (both present and future) of the Company, by way of mortgage of the immovable properties and hypothecation of all movable fixed assets: and

ii) second pari passu charge over entire current assets (both present and future) of the Company, by way of hypothecation and/or pledge of all current assets including all receivable, finished goods, raw materials, work in progress, consumable stores and spares, book debts and bills receivable.

2 The sustainable working capital facilities (fund based, non-fund based, buyer credits etc.) have been secured by way of

i) first pari-passu charge over entire current assets (both present and future) of the Company, by way of hypothecation and/or pledge of all current assets including all receivable, finished goods, raw materials, work in progress, consumable stores and spares, book debts, bills receivable; and

ii) second pari-passu charge over entire fixed assets (both present and future) of the Company, by way of mortgage of the immovable properties and hypothecation of all movable fixed assets.

3 The long-term borrowings and sustainable working capital facilities, restructured under the CDR package, have been additionally secured by personal guarantees and pledge of equity shares of the Company held by three promoter directors of the Company viz. Mr. Soshil Kumar Jain, Dr. Rajesh Jain and Mr. Sandeep Jain. The personal guarantee and pledge of equity shares of the Company held by Mr. Ravinder Jain and Mr. Sumit Jain are currently pending. In the meantime, Mr. Ravinder Jain has ceased to be promoter and director on February 21, 2018 due to his sad demise.

4 The long-term loans and working capital facilities from SBI and EARC (loan I) are additionally secured by way of mortgage of personal property of promoter directors, viz. Mr. Soshil Kumar Jain, Dr. Rajesh Jain and Mr. Sandeep Jain, situated at House No.18 (Middle and Rear Portions), Block No.56, East Park Road, Karol Bagh, New Delhi.

5 The details of immovable properties of the Company mortgaged in favour of SBI CAP Trustee Co. Ltd. (acting as trustee on behalf of the CDR Lenders) to

secure the long-term borrowings and sustainable working capital borrowings as mentioned above, are as under:

i. All parcels of lands admeasuring 96 Bighas 19 Biswas situated at Village Samelheri, Tehsil Derabassi, District S.A.S. Nagar (Mohali), Punjab;

ii. All parcels of land admeasuring 93 Bighas, 12 Biswas and 10 Biswasi situated at Village Samelheri, Tehsil Derabassi, District S.A.S. Nagar (Mohali), Punjab;

iii. All parcels of land admeasuring 26 Bighas 3 biswas comprised in various Khewat/Khatoni Numbers, situated at Village Manpura, Tehsil Baddi, District Solan, Himachal Pradesh;

iv. All parcels of land admeasuring 91 Bighas 1 Biswa, comprised in various Khewat/Khatoni Numbers situated at Village Malpur, Tehsil Baddi, District Solan, Himachal Pradesh;

v. All parcels of Land bearing Plot No. E-4, Phase-2, Area measuring 9435.66 Sq.Yds., situated at Industrial Area S.A.S. Nagar, District S.A.S. Nagar (Mohali), Punjab;

vi. Flat number 3, 4, 203 and 303 situated at Elite Heights Apartment, at municipal no. 6-3-1238/15/1 & 6-3-1238/16 survey no. 32/1, at Somajiguda, Hyderabad, Telangana;

vii. Industrial plot no. A-24, A-25 and A-27 having land measuring 718.92 sq yds each at Block B-1 Extension and Industrial plot no. E-12 having land measuring 1,372.52 sq yds at Block B-1, situated at Mohan Co-operative Industrial Estate, Mathura Road, New Delhi;

viii. Plot no.35 & 36 measuring 900 sq. yds. each at Silver City Main, Village Bishanpura, MC Zirakpur, Tehsil Dera Bassi, District SAS Nagar (Mohali), Punjab;

ix. 80 flats, i.e., 20 flats comprising in blocks: A-2 bearing no.101 to 104, 201 to 204, 301 to 304, 401 to 404 & 501 to 504 each having super area 1495 sqft and 60 flats in block B-10, B-11, B-12 bearing no.101 to 104, 201 to 204, 301 to 304, 401 to 404 & 501 to 504 each having super area 1161 sqft (30 flats) and super area 1186 sq ft (30 flats) in building built on land measuring 28 bigha 11 biswa in khewat khatoni no: 89/91 comprised in khasra no: 1747(4-12), khewat khatoni no: 168/194 khasra no: 1970/1746 (1-15), 1971/1746(3-0), 1748(9-0) khewat khatoni no: 339/333 khasra no: 1749 (4-11),1750(5-13), kitas 6, village Bhatoli Kalan, Hadbast no. 214, Pargna Dharampura, Tehsil Baddi, District Solan, H.P.

x. Flat no. 201 at Samarpan Complex, village Chakala, Taluka Andheri (East), Mumbai;

xi. Flat no. 401, 601 in A-wing and Flat no. 214 in C-wing situated at Progressive''s Signature Tower, plot no: 53/54 sector-6, Ghansoli, Navi Mumbai;

xii. Residential premises no. 703, 704, 903, 904 and 1001 to 1004 in wing "B" of Sagar Heights Building F; and Commercial premises no. 707 to 712, 714 to 718, 808 to 812 and 814 to 818 in Sagar Tech Plaza- Building A, all situated at CTS no . 721/A, 721B, & 721/1 survey no: 14,15,2052, at village Mohili, Andheri Kurla Road, Andheri (East), Mumbai; and

xiii. Industrial plot no. Gen-72/3, land measuring 5518 sq. mts. in the Trans Thane Creek Industrial Area, Navi Mumbai.

C. Repayment terms and security of the loans outside the CDR Scheme:

1 Rupee term loan from BIRAC for H1N1 project, with amount outstanding of Rs. 44.00 million (March 31, 2017: Rs.70.00 million; April 1, 2016: Rs. 70.00 million), was rescheduled in the financial year 2015-16. It is repayable in ten equal half-yearly instalments commencing from March 31, 2017. This loan is secured by way of hypothecation of all equipment, apparatus, machineries, machineries spares, tools and other accessories, goods and/or other movable property (both present and future) of the Company by way of first charge on pari-passu basis.

2 Rupee term loan from BIRAC for Streptococcus project, with amount outstanding of Rs. 12.00 million (March 31, 2017: Rs. 15.00 million; April 1, 2016: Rs. 15.00 million), is repayable in ten equal half-yearly instalments commencing from May 29, 2017 and is secured by way of hypothecation of all equipment, apparatus, machineries, machineries spares, tools and other accessories, goods and/or other movable property (both present and future) of the Company by way of first charge on pari-passu basis.

3 The unsecured rupee term loan from DST of Rs. 8.00 million (March 31, 2017: Rs. 10.00 million; April 1, 2016: Rs. 12.00 million), is for specific project and is repayable in ten equal annual instalments commencing from September 2012.

4 Rupee term loan from TDB of Rs. 5.56 million as at March 31, 2017 (Rs. 8.33 million as at April 1, 2016), was for oncology project and has been repaid in full along with accrued interest on May 01, 2017. Rupee term loan from TDB of Rs. 57.98 million as at March 31, 2018 (March 31, 2017: Nil; April 1, 2016: Nil) is for Dengue vaccine project and is repayable in nine equal half-yearly instalments commencing from July 1, 2020 and is secured by way of first pari-passu charge (i) on the whole of the moveable properties of the Company including its movable plant and machinery, machinery spares, tools and accessories and other movables both present and future except book debts; and (ii) mortgage of immovable properties of the Company being land admeasuring 1011.11 sq. yards, situated at Plot no. 37, Sector 21-A, Urban Estate Faridabad, Haryana.

D. Liability component of compound financial instruments

Notes:

i) The equity component is the difference between fair value of liability component computed at the effective interest rate of 11% p.a. and the value of preference shares issued, which is presented as a separate component of equity under Statement of Changes in Equity.

ii) Interest expense is calculated by applying the effective interest rate of 11% p.a. to the liability component Terms attached to 0.5% cumulative non-convertible and non-participating redeemable preference shares:

The preference shares have been issued for a period of 10 years with an option with the Company as well as preference shareholders for early redemption of preference shares, provided CDR debts are fully serviced and the Company comes out from the purview of CDR system. In the event of liquidation of the Company, the holders of preference shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in preference to the equity shareholders. The distribution will be in proportion to the number of preference shares held by the preference shareholders.

E. Refer note 46 for defaults of repayment of loans and interest thereon.

F. Refer note 42 for assets pledged under security.

Note:

i) Rate of interest - The Company''s current borrowings from banks are at an effective weighted average rate ranging from 9% to 11% (31 March 2016: 9% to 11%) (1 April 2015: 9% to 11%) per annum.

ii) The sustainable working capital facilities (fund based, non-fund based, buyer credits etc.) have been secured by way of:

a) first pari-passu charge over entire current assets (both present and future) of the Company, by way of hypothecation and/or pledge of all current assets including all receivable, finished goods, raw materials, work in progress, consumable stores and spares, book debts, bills receivable; and

b) second pari-passu charge over entire fixed assets (both present and future) of the Company, by way of mortgage of the immovable properties and hypothecation of all movable fixed assets.

iii) Refer note 41 for related party disclosure.

iv) Refer note 42 for assets pledged and security.

v) Refer note 46 for default in repayment and interest thereon.

vi) Refer note 47 for disclosure of fair value in respect of financial liabilities measured at amortised cost and note 48 for maturities of financial liabilities.

Deferred tax assets have been recognised to the extent there are sufficient taxable temporary differences.

Minimum Alternate Tax (MAT)

The Company has unused MAT credit which has been recognised on the basis that recovery is probable in the foreseeable future. MAT credit of Rs.165.41 million and Rs.165.71 expires on March 31, 2025 and March 31, 2026 respectively.

Notes :

a) i) Includes income tax demand of Rs. 162.22 million in respect to Assessment Year (AY) 2005-06. The Income Tax department had issued demand based on certain grounds related to purchases made by the Company from an overseas vendor. The matter was decided in favour of the Company and the demand was cancelled by CIT (Appeals). However, the Income Tax Department has filed appeal before Income Tax Appellate Tribunal (ITAT) against the order of CIT (Appeals) which is pending at present. The Company believes that it has merit in these cases, hence no provision is required.

ii) A search operation was conducted by the Income Tax Department in the premises of the Company in January 2012 and hence the Company had re-filed the income tax returns for the AY 2006-07 to 2012-13. During the year ended March 31, 2015, the Income Tax department completed the assessment of the said years, disallowed certain expenses and issued demand of Rs. 3,294.90 million (including interest) on various grounds. The Company preferred appeals before the CIT (Appeals) against the orders of the Income Tax department. The appeals were decided in favour of the Company and the demand was cancelled. However, CIT (Appeals) has made certain disallowances with respect to AY 2010-11 and AY 2011-12 against which the Company has filed appeals before the ITAT. The Income Tax Department has also filed appeals before ITAT against the orders of CIT (Appeals). The appeals before ITAT are pending at present. Based on legal advice, the Company believes that it has merits in these cases, hence no provision is required.

iii) The income tax department issued a demand of Rs. 5.74 million in respect of AY 2009-10 on the Company due to non-deduction of withholding tax on payment made to a non-resident person towards purchase of immovable property. The Company had filed an appeal before CIT (Appeals) against the order of department but the CIT (Appeals) gave decision in favour of department. The Company has filed an appeal before Income Tax Appellate Tribunal (ITAT) against the order of CIT (Appeals) which is pending at present. The Company believes that it has merit in

* Represents deemed cost on the date of transition to Ind AS. Gross block and accumulated depreciation from the Previous GAAP have been disclosed for the purpose of better understanding of the original cost of assets.

Notes : a) Plant and equipment includes plant and machinery amounting to Rs. 0.86 million (March 31, 2017: Rs.1.30 million; April 1, 2016: Rs. 2.00 million) (net block) lying with third parties.

b) Property, plant and equipment pledged as security : Refer note 42 for information on assets pledged as security by the Company.

c) Contractual commitments : Refer note 38(B) for information on contractual commitments related to property, plant and equipment.

i) Fixed deposits amounting to Rs. 52.17 million (March 31, 2017; Rs. 45.80 million; April 1, 2016: Rs. 32.36 million) are pledged with banks and various Government authorities for tender, bank guarantee, margin money etc.

ii) Not available for use by the Company as these represent corresponding unpaid/unclaimed dividend liabilities.

16 Assets held for sale

During the year ended March 31, 2016, the Board of Directors decided to dispose off the Company''s investment in a subsidiary, namely New Rise Healthcare Private Limited to hive off the non-core operations. Consequently, the investment in the subsidiary was disclosed as ''Assets held for sale''. Further during April 2017, the Company acquired 942,980 equity shares from the minority shareholders of New Rise Healthcare Private Ltd., thereby making it a wholly owned subsidiary of the Company. Subsequently, the Company sold the entire 100% equity stake to Narayana Hrudayalaya Ltd. for an enterprise value of Rs. 1,800.00 million. The Company has incurred a loss of Rs. 450.87 million on such sale after settling all external liabilities and preferential payments. The Company had considered the net consideration realised in relation to aforesaid transaction as recoverable amount of investment as at March 31, 2017 and consequently recorded an impairment provision of Rs. 450.87 million which had been included in exceptional items in financial year 2016-17.

c) Terms/right attached to equity shares:

The Company has only one class of equity shares having a par value of Re. 1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board of Directors has not proposed any dividend for current year and previous year. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts including preference shares. The distribution will be in proportion to the number of equity shares held by the equity shareholders.

The above information has been furnished as per the shareholders'' detail available with the Company at the year end.

f) Terms attached to 0.5% cumulative non-convertible and non-participating redeemable preference shares:

The Company has only one class of preference shares having a par value of Rs.10 per share. The Company declares and pays dividends in Indian Rupees. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board of Directors has not proposed any dividend for current year and previous year.

The preference shares have been issued for a period of 10 years with an option with the Company as well as preference shareholders for early redemption of preference shares, provided CDR debts (refer note 19A) are fully serviced and the Company comes out from the purview of CDR system. In the event of liquidation of the Company, the holders of preference shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in preference to the equity shareholders. The distribution will be in proportion to the number of preference shares held by the preference shareholders.

g) Reconciliation of 0.5% cumulative non-convertible and non-participating redeemable preference shares outstanding at the beginning and at the end of the reporting financial year:

h) No equity/preference shares have been bought back or bonus share and shares have been issued for consideration other than cash during the period of five years immediately preceding the reporting date except for issue of preference shares by conversion of loan in financial year 2014-15 amounting to Rs.163,000,000.

Nature and purpose of other reserves

Equity component of compound financial instrument : Redeemable preference shares issued by the company have been classified as borrowings and recognized at amortised cost on transition date as against part of equity as per Previous GAAP. The difference on the transition date has been recognised as a separate component in other equity. Interest charge at effective interest rate on such instruments has been recognised as finance cost in subsequent periods.

General reserve : The Company has transferred a portion of the net profit before declaring dividend to general reserve pursuant to the provisions of the erstwhile Companies Act, 1956. Mandatory transfer to general reserve is not required under the Act.

Securities premium reserve : represents premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Act. Capital redemption reserve : created in accordance with provisions of the Act for the buyback of equity shares from the market.

Foreign currency monetary item translation difference account : Exchange difference arising on long term foreign currency monetary items related to foreign currency term loan.

Other comprehensive income : The Company has recognised remeasurements benefits on defined benefits plans through other comprehensive income.

Notes:

Rate of interest - The Company''s long term borrowings are at an effective weighted average rate of 11% (March 31, 2017: 11%) (April 01, 2016: 11%) per annum.

A. Loans under Corporate Debt Restructuring (CDR) (refer note 53)

1 All the long-term loans and sustainable working capital borrowings from the banks have been restructured under the CDR package approved by the Corporate Debt Restructuring Empowered Group (CDR- EG) on September 24, 2014, except foreign currency term loan from Bank of India.

2 The Company has executed Master Restructuring Agreement (MRA)/other definitive documents with all lender banks, except state bank of Travancore ("SBT"), On December 27, 2014 with cut-off date of October 01, 2013. Under the CDR package, the Company is entitled to reliefs and concessions granted by the banks, effective from the cut-off date.

3 Key terms of restructuring of the long-term loans are as under:

i. Tenure: Door to Door 10 Years.

ii. Additional moratorium of 2 years and 2 months from Cut Off Date.

iii. Repayment of loans: 32 structured quarterly instalments starting from quarter ended December 2015 till quarter ending September 2023. However, first instalment was payable on November 30, 2015 instead of December 31, 2015.

iv. Interest rate: 11% p.a. (floating), linked to base rates of respective Lenders from October 1, 2013 to September 30, 2018, thereafter rate of interest will increase to 13% p.a. linked to base rate of respective lenders w.e.f. October 1, 2018.

v. Interest obligations aggregating Rs.1,156.40 million on (i) restructured long-term loans and the foreign currency term loan from Bank of India for a period of 24 months from Cut Off Date; and (ii) sustainable working capital borrowings for a period of 12 months from Cut Off Date, were converted into Funded Interest Term Loan (FITL).

vi. The dues aggregating to Rs.842.80 million in the working capital borrowings as on the Cut Off Date were converted into Working Capital Term Loan (WCTL).

4 The foreign currency term loan (ECB) from Bank of India of US$ 25.00 million is repayable in three equal yearly instalments commencing from financial year 2017-18 onwards.

5 During financial year 2015-16, SBT had assigned all the rights, title and interest in the entire outstanding dues owed by the Company together with all the underlying securities and guarantees, comprising its Rupee term loan and sustainable working capital along with all accrued interest thereon, in favour of Edelweiss Asset Reconstruction Company Limited ("EARC"). These loans were part of CDR. EARC had restructured the entire outstanding of Rs.1,649.50 million for an aggregate principal amount of Rs.1,153.00 million (Refer note 52 and 53) . As a result of restructuring of repayment of interest and principal, total liability of Rs.1,899.94 million is repayable as per the following terms:

i. Cut Off date January 01, 2016

ii. Principal payment of Rs.30.50 million to be paid on or before January 31, 2016

iii. Balance principal amount of Rs.1,122.50 million is repayable in 29 structured quarterly instalments commencing from the quarter ending March 31, 2016 till the quarter ending March 31, 2023

iv. Interest rate shall be 11% p.a. up to September 30, 2018 and 13% p.a. thereafter up to March 31, 2023, payable on quarterly rests along with principal instalments

6 During financial year 2015-16, State Bank of Mysore ("SBM") had absolutely assigned all the rights, title and interests in financial assistance granted to the Company, with all the underlying rights, benefits and obligations in favour of EARC vide assignment agreement dated February 26, 2016 (Refer note 53). These loans were part of CDR. EARC had restructured the entire outstanding of Rs. 166.90 million for an aggregate principal amount of Rs. 140.00 million. As a result of restructuring of repayment of interest and principal, total liability of Rs. 223.30 million is repayable as per the following terms:

i. Cut Off date February 26, 2016

ii. Principal amount of Rs. 140.00 million is repayable in 28 structured quarterly instalments commencing from the quarter ending June 30, 2016 till the quarter ending March 31, 2023

iii. Interest rate shall be 11% p.a., payable on quarterly rests along with principal instalments

B. Securities for the non-current loans and sustainable working capital borrowings:

1 The long-term borrowings, except rupee term loans from BIRAC, TDB and DST have been secured by way of:

i) first pari-passu charge over entire fixed assets (both present and future) of the Company, by way of mortgage of the immovable properties and hypothecation of all movable fixed assets: and

ii) second pari passu charge over entire current assets (both present and future) of the Company, by way of hypothecation and/or pledge of all current assets including all receivable, finished goods, raw materials, work in progress, consumable stores and spares, book debts and bills receivable.

2 The sustainable working capital facilities (fund based, non-fund based, buyer credits etc.) have been secured by way of

i) first pari-passu charge over entire current assets (both present and future) of the Company, by way of hypothecation and/or pledge of all current assets including all receivable, finished goods, raw materials, work in progress, consumable stores and spares, book debts, bills receivable; and

ii) second pari-passu charge over entire fixed assets (both present and future) of the Company, by way of mortgage of the immovable properties and hypothecation of all movable fixed assets.

3 The long-term borrowings and sustainable working capital facilities, restructured under the CDR package, have been additionally secured by personal guarantees and pledge of equity shares of the Company held by three promoter directors of the Company viz. Mr. Soshil Kumar Jain, Dr. Rajesh Jain and Mr. Sandeep Jain. The personal guarantee and pledge of equity shares of the Company held by Mr. Ravinder Jain and Mr. Sumit Jain are currently pending. In the meantime, Mr. Ravinder Jain has ceased to be promoter and director on February 21, 2018 due to his sad demise.

4 The long-term loans and working capital facilities from SBI and EARC (loan I) are additionally secured by way of mortgage of personal property of promoter directors, viz. Mr. Soshil Kumar Jain, Dr. Rajesh Jain and Mr. Sandeep Jain, situated at House No.18 (Middle and Rear Portions), Block No.56, East Park Road, Karol Bagh, New Delhi.

5 The details of immovable properties of the Company mortgaged in favour of SBI CAP Trustee Co. Ltd. (acting as trustee on behalf of the CDR Lenders) to

secure the long-term borrowings and sustainable working capital borrowings as mentioned above, are as under:

i. All parcels of lands admeasuring 96 Bighas 19 Biswas situated at Village Samelheri, Tehsil Derabassi, District S.A.S. Nagar (Mohali), Punjab;

ii. All parcels of land admeasuring 93 Bighas, 12 Biswas and 10 Biswasi situated at Village Samelheri, Tehsil Derabassi, District S.A.S. Nagar (Mohali), Punjab;

iii. All parcels of land admeasuring 26 Bighas 3 biswas comprised in various Khewat/Khatoni Numbers, situated at Village Manpura, Tehsil Baddi, District Solan, Himachal Pradesh;

iv. All parcels of land admeasuring 91 Bighas 1 Biswa, comprised in various Khewat/Khatoni Numbers situated at Village Malpur, Tehsil Baddi, District Solan, Himachal Pradesh;

v. All parcels of Land bearing Plot No. E-4, Phase-2, Area measuring 9435.66 Sq.Yds., situated at Industrial Area S.A.S. Nagar, District S.A.S. Nagar (Mohali), Punjab;

vi. Flat number 3, 4, 203 and 303 situated at Elite Heights Apartment, at municipal no. 6-3-1238/15/1 & 6-3-1238/16 survey no. 32/1, at Somajiguda, Hyderabad, Telangana;

vii. Industrial plot no. A-24, A-25 and A-27 having land measuring 718.92 sq yds each at Block B-1 Extension and Industrial plot no. E-12 having land measuring 1,372.52 sq yds at Block B-1, situated at Mohan Co-operative Industrial Estate, Mathura Road, New Delhi;

viii. Plot no.35 & 36 measuring 900 sq. yds. each at Silver City Main, Village Bishanpura, MC Zirakpur, Tehsil Dera Bassi, District SAS Nagar (Mohali), Punjab;

ix. 80 flats, i.e., 20 flats comprising in blocks: A-2 bearing no.101 to 104, 201 to 204, 301 to 304, 401 to 404 & 501 to 504 each having super area 1495 sqft and 60 flats in block B-10, B-11, B-12 bearing no.101 to 104, 201 to 204, 301 to 304, 401 to 404 & 501 to 504 each having super area 1161 sqft (30 flats) and super area 1186 sq ft (30 flats) in building built on land measuring 28 bigha 11 biswa in khewat khatoni no: 89/91 comprised in khasra no: 1747(4-12), khewat khatoni no: 168/194 khasra no: 1970/1746 (1-15), 1971/1746(3-0), 1748(9-0) khewat khatoni no: 339/333 khasra no: 1749 (4-11),1750(5-13), kitas 6, village Bhatoli Kalan, Hadbast no. 214, Pargna Dharampura, Tehsil Baddi, District Solan, H.P.

x. Flat no. 201 at Samarpan Complex, village Chakala, Taluka Andheri (East), Mumbai;

xi. Flat no. 401, 601 in A-wing and Flat no. 214 in C-wing situated at Progressive''s Signature Tower, plot no: 53/54 sector-6, Ghansoli, Navi Mumbai;

xii. Residential premises no. 703, 704, 903, 904 and 1001 to 1004 in wing "B" of Sagar Heights Building F; and Commercial premises no. 707 to 712, 714 to 718, 808 to 812 and 814 to 818 in Sagar Tech Plaza- Building A, all situated at CTS no . 721/A, 721B, & 721/1 survey no: 14,15,2052, at village Mohili, Andheri Kurla Road, Andheri (East), Mumbai; and

xiii. Industrial plot no. Gen-72/3, land measuring 5518 sq. mts. in the Trans Thane Creek Industrial Area, Navi Mumbai.

C. Repayment terms and security of the loans outside the CDR Scheme:

1 Rupee term loan from BIRAC for H1N1 project, with amount outstanding of Rs. 44.00 million (March 31, 2017: Rs.70.00 million; April 1, 2016: Rs. 70.00 million), was rescheduled in the financial year 2015-16. It is repayable in ten equal half-yearly instalments commencing from March 31, 2017. This loan is secured by way of hypothecation of all equipment, apparatus, machineries, machineries spares, tools and other accessories, goods and/or other movable property (both present and future) of the Company by way of first charge on pari-passu basis.

2 Rupee term loan from BIRAC for Streptococcus project, with amount outstanding of Rs. 12.00 million (March 31, 2017: Rs. 15.00 million; April 1, 2016: Rs. 15.00 million), is repayable in ten equal half-yearly instalments commencing from May 29, 2017 and is secured by way of hypothecation of all equipment, apparatus, machineries, machineries spares, tools and other accessories, goods and/or other movable property (both present and future) of the Company by way of first charge on pari-passu basis.

3 The unsecured rupee term loan from DST of Rs. 8.00 million (March 31, 2017: Rs. 10.00 million; April 1, 2016: Rs. 12.00 million), is for specific project and is repayable in ten equal annual instalments commencing from September 2012.

4 Rupee term loan from TDB of Rs. 5.56 million as at March 31, 2017 (Rs. 8.33 million as at April 1, 2016), was for oncology project and has been repaid in full along with accrued interest on May 01, 2017. Rupee term loan from TDB of Rs. 57.98 million as at March 31, 2018 (March 31, 2017: Nil; April 1, 2016: Nil) is for Dengue vaccine project and is repayable in nine equal half-yearly instalments commencing from July 1, 2020 and is secured by way of first pari-passu charge (i) on the whole of the moveable properties of the Company including its movable plant and machinery, machinery spares, tools and accessories and other movables both present and future except book debts; and (ii) mortgage of immovable properties of the Company being land admeasuring 1011.11 sq. yards, situated at Plot no. 37, Sector 21-A, Urban Estate Faridabad, Haryana.

D. Liability component of compound financial instruments

Notes:

i) The equity component is the difference between fair value of liability component computed at the effective interest rate of 11% p.a. and the value of preference shares issued, which is presented as a separate component of equity under Statement of Changes in Equity.

ii) Interest expense is calculated by applying the effective interest rate of 11% p.a. to the liability component Terms attached to 0.5% cumulative non-convertible and non-participating redeemable preference shares:

The preference shares have been issued for a period of 10 years with an option with the Company as well as preference shareholders for early redemption of preference shares, provided CDR debts are fully serviced and the Company comes out from the purview of CDR system. In the event of liquidation of the Company, the holders of preference shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in preference to the equity shareholders. The distribution will be in proportion to the number of preference shares held by the preference shareholders.

E. Refer note 46 for defaults of repayment of loans and interest thereon.

F. Refer note 42 for assets pledged under security.

Note:

i) Rate of interest - The Company''s current borrowings from banks are at an effective weighted average rate ranging from 9% to 11% (31 March 2016: 9% to 11%) (1 April 2015: 9% to 11%) per annum.

ii) The sustainable working capital facilities (fund based, non-fund based, buyer credits etc.) have been secured by way of:

a) first pari-passu charge over entire current assets (both present and future) of the Company, by way of hypothecation and/or pledge of all current assets including all receivable, finished goods, raw materials, work in progress, consumable stores and spares, book debts, bills receivable; and

b) second pari-passu charge over entire fixed assets (both present and future) of the Company, by way of mortgage of the immovable properties and hypothecation of all movable fixed assets.

iii) Refer note 41 for related party disclosure.

iv) Refer note 42 for assets pledged and security.

v) Refer note 46 for default in repayment and interest thereon.

vi) Refer note 47 for disclosure of fair value in respect of financial liabilities measured at amortised cost and note 48 for maturities of financial liabilities.

Deferred tax assets have been recognised to the extent there are sufficient taxable temporary differences.

Minimum Alternate Tax (MAT)

The Company has unused MAT credit which has been recognised on the basis that recovery is probable in the foreseeable future. MAT credit of Rs.165.41 million and Rs.165.71 expires on March 31, 2025 and March 31, 2026 respectively.

Notes :

a) i) Includes income tax demand of Rs. 162.22 million in respect to Assessment Year (AY) 2005-06. The Income Tax department had issued demand based on certain grounds related to purchases made by the Company from an overseas vendor. The matter was decided in favour of the Company and the demand was cancelled by CIT (Appeals). However, the Income Tax Department has filed appeal before Income Tax Appellate Tribunal (ITAT) against the order of CIT (Appeals) which is pending at present. The Company believes that it has merit in these cases, hence no provision is required.

ii) A search operation was conducted by the Income Tax Department in the premises of the Company in January 2012 and hence the Company had re-filed the income tax returns for the AY 2006-07 to 2012-13. During the year ended March 31, 2015, the Income Tax department completed the assessment of the said years, disallowed certain expenses and issued demand of Rs. 3,294.90 million (including interest) on various grounds. The Company preferred appeals before the CIT (Appeals) against the orders of the Income Tax department. The appeals were decided in favour of the Company and the demand was cancelled. However, CIT (Appeals) has made certain disallowances with respect to AY 2010-11 and AY 2011-12 against which the Company has filed appeals before the ITAT. The Income Tax Department has also filed appeals before ITAT against the orders of CIT (Appeals). The appeals before ITAT are pending at present. Based on legal advice, the Company believes that it has merits in these cases, hence no provision is required.

iii) The income tax department issued a demand of Rs. 5.74 million in respect of AY 2009-10 on the Company due to non-deduction of withholding tax on payment made to a non-resident person towards purchase of immovable property. The Company had filed an appeal before CIT (Appeals) against the order of department but the CIT (Appeals) gave decision in favour of department. The Company has filed an appeal before Income Tax Appellate Tribunal (ITAT) against the order of CIT (Appeals) which is pending at present. The Company believes that it has merit in

* Represents deemed cost on the date of transition to Ind AS. Gross block and accumulated depreciation from the Previous GAAP have been disclosed for the purpose of better understanding of the original cost of assets.

Notes : a) Plant and equipment includes plant and machinery amounting to Rs. 0.86 million (March 31, 2017: Rs.1.30 million; April 1, 2016: Rs. 2.00 million) (net block) lying with third parties.

b) Property, plant and equipment pledged as security : Refer note 42 for information on assets pledged as security by the Company.

c) Contractual commitments : Refer note 38(B) for information on contractual commitments related to property, plant and equipment.

i) Fixed deposits amounting to Rs. 52.17 million (March 31, 2017; Rs. 45.80 million; April 1, 2016: Rs. 32.36 million) are pledged with banks and various Government authorities for tender, bank guarantee, margin money etc.

ii) Not available for use by the Company as these represent corresponding unpaid/unclaimed dividend liabilities.

16 Assets held for sale

During the year ended March 31, 2016, the Board of Directors decided to dispose off the Company''s investment in a subsidiary, namely New Rise Healthcare Private Limited to hive off the non-core operations. Consequently, the investment in the subsidiary was disclosed as ''Assets held for sale''. Further during April 2017, the Company acquired 942,980 equity shares from the minority shareholders of New Rise Healthcare Private Ltd., thereby making it a wholly owned subsidiary of the Company. Subsequently, the Company sold the entire 100% equity stake to Narayana Hrudayalaya Ltd. for an enterprise value of Rs. 1,800.00 million. The Company has incurred a loss of Rs. 450.87 million on such sale after settling all external liabilities and preferential payments. The Company had considered the net consideration realised in relation to aforesaid transaction as recoverable amount of investment as at March 31, 2017 and consequently recorded an impairment provision of Rs. 450.87 million which had been included in exceptional items in financial year 2016-17.

c) Terms/right attached to equity shares:

The Company has only one class of equity shares having a par value of Re. 1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board of Directors has not proposed any dividend for current year and previous year. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts including preference shares. The distribution will be in proportion to the number of equity shares held by the equity shareholders.

The above information has been furnished as per the shareholders'' detail available with the Company at the year end.

f) Terms attached to 0.5% cumulative non-convertible and non-participating redeemable preference shares:

The Company has only one class of preference shares having a par value of Rs.10 per share. The Company declares and pays dividends in Indian Rupees. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board of Directors has not proposed any dividend for current year and previous year.

The preference shares have been issued for a period of 10 years with an option with the Company as well as preference shareholders for early redemption of preference shares, provided CDR debts (refer note 19A) are fully serviced and the Company comes out from the purview of CDR system. In the event of liquidation of the Company, the holders of preference shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in preference to the equity shareholders. The distribution will be in proportion to the number of preference shares held by the preference shareholders.

g) Reconciliation of 0.5% cumulative non-convertible and non-participating redeemable preference shares outstanding at the beginning and at the end of the reporting financial year:

h) No equity/preference shares have been bought back or bonus share and shares have been issued for consideration other than cash during the period of five years immediately preceding the reporting date except for issue of preference shares by conversion of loan in financial year 2014-15 amounting to Rs.163,000,000.

Nature and purpose of other reserves

Equity component of compound financial instrument : Redeemable preference shares issued by the company have been classified as borrowings and recognized at amortised cost on transition date as against part of equity as per Previous GAAP. The difference on the transition date has been recognised as a separate component in other equity. Interest charge at effective interest rate on such instruments has been recognised as finance cost in subsequent periods.

General reserve : The Company has transferred a portion of the net profit before declaring dividend to general reserve pursuant to the provisions of the erstwhile Companies Act, 1956. Mandatory transfer to general reserve is not required under the Act.

Securities premium reserve : represents premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Act. Capital redemption reserve : created in accordance with provisions of the Act for the buyback of equity shares from the market.

Foreign currency monetary item translation difference account : Exchange difference arising on long term foreign currency monetary items related to foreign currency term loan.

Other comprehensive income : The Company has recognised remeasurements benefits on defined benefits plans through other comprehensive income.

Notes:

Rate of interest - The Company''s long term borrowings are at an effective weighted average rate of 11% (March 31, 2017: 11%) (April 01, 2016: 11%) per annum.

A. Loans under Corporate Debt Restructuring (CDR) (refer note 53)

1 All the long-term loans and sustainable working capital borrowings from the banks have been restructured under the CDR package approved by the Corporate Debt Restructuring Empowered Group (CDR- EG) on September 24, 2014, except foreign currency term loan from Bank of India.

2 The Company has executed Master Restructuring Agreement (MRA)/other definitive documents with all lender banks, except state bank of Travancore ("SBT"), On December 27, 2014 with cut-off date of October 01, 2013. Under the CDR package, the Company is entitled to reliefs and concessions granted by the banks, effective from the cut-off date.

3 Key terms of restructuring of the long-term loans are as under:

i. Tenure: Door to Door 10 Years.

ii. Additional moratorium of 2 years and 2 months from Cut Off Date.

iii. Repayment of loans: 32 structured quarterly instalments starting from quarter ended December 2015 till quarter ending September 2023. However, first instalment was payable on November 30, 2015 instead of December 31, 2015.

iv. Interest rate: 11% p.a. (floating), linked to base rates of respective Lenders from October 1, 2013 to September 30, 2018, thereafter rate of interest will increase to 13% p.a. linked to base rate of respective lenders w.e.f. October 1, 2018.

v. Interest obligations aggregating Rs.1,156.40 million on (i) restructured long-term loans and the foreign currency term loan from Bank of India for a period of 24 months from Cut Off Date; and (ii) sustainable working capital borrowings for a period of 12 months from Cut Off Date, were converted into Funded Interest Term Loan (FITL).

vi. The dues aggregating to Rs.842.80 million in the working capital borrowings as on the Cut Off Date were converted into Working Capital Term Loan (WCTL).

4 The foreign currency term loan (ECB) from Bank of India of US$ 25.00 million is repayable in three equal yearly instalments commencing from financial year 2017-18 onwards.

5 During financial year 2015-16, SBT had assigned all the rights, title and interest in the entire outstanding dues owed by the Company together with all the underlying securities and guarantees, comprising its Rupee term loan and sustainable working capital along with all accrued interest thereon, in favour of Edelweiss Asset Reconstruction Company Limited ("EARC"). These loans were part of CDR. EARC had restructured the entire outstanding of Rs.1,649.50 million for an aggregate principal amount of Rs.1,153.00 million (Refer note 52 and 53) . As a result of restructuring of repayment of interest and principal, total liability of Rs.1,899.94 million is repayable as per the following terms:

i. Cut Off date January 01, 2016

ii. Principal payment of Rs.30.50 million to be paid on or before January 31, 2016

iii. Balance principal amount of Rs.1,122.50 million is repayable in 29 structured quarterly instalments commencing from the quarter ending March 31, 2016 till the quarter ending March 31, 2023

iv. Interest rate shall be 11% p.a. up to September 30, 2018 and 13% p.a. thereafter up to March 31, 2023, payable on quarterly rests along with principal instalments

6 During financial year 2015-16, State Bank of Mysore ("SBM") had absolutely assigned all the rights, title and interests in financial assistance granted to the Company, with all the underlying rights, benefits and obligations in favour of EARC vide assignment agreement dated February 26, 2016 (Refer note 53). These loans were part of CDR. EARC had restructured the entire outstanding of Rs. 166.90 million for an aggregate principal amount of Rs. 140.00 million. As a result of restructuring of repayment of interest and principal, total liability of Rs. 223.30 million is repayable as per the following terms:

i. Cut Off date February 26, 2016

ii. Principal amount of Rs. 140.00 million is repayable in 28 structured quarterly instalments commencing from the quarter ending June 30, 2016 till the quarter ending March 31, 2023

iii. Interest rate shall be 11% p.a., payable on quarterly rests along with principal instalments

B. Securities for the non-current loans and sustainable working capital borrowings:

1 The long-term borrowings, except rupee term loans from BIRAC, TDB and DST have been secured by way of:

i) first pari-passu charge over entire fixed assets (both present and future) of the Company, by way of mortgage of the immovable properties and hypothecation of all movable fixed assets: and

ii) second pari passu charge over entire current assets (both present and future) of the Company, by way of hypothecation and/or pledge of all current assets including all receivable, finished goods, raw materials, work in progress, consumable stores and spares, book debts and bills receivable.

2 The sustainable working capital facilities (fund based, non-fund based, buyer credits etc.) have been secured by way of

i) first pari-passu charge over entire current assets (both present and future) of the Company, by way of hypothecation and/or pledge of all current assets including all receivable, finished goods, raw materials, work in progress, consumable stores and spares, book debts, bills receivable; and

ii) second pari-passu charge over entire fixed assets (both present and future) of the Company, by way of mortgage of the immovable properties and hypothecation of all movable fixed assets.

3 The long-term borrowings and sustainable working capital facilities, restructured under the CDR package, have been additionally secured by personal guarantees and pledge of equity shares of the Company held by three promoter directors of the Company viz. Mr. Soshil Kumar Jain, Dr. Rajesh Jain and Mr. Sandeep Jain. The personal guarantee and pledge of equity shares of the Company held by Mr. Ravinder Jain and Mr. Sumit Jain are currently pending. In the meantime, Mr. Ravinder Jain has ceased to be promoter and director on February 21, 2018 due to his sad demise.

4 The long-term loans and working capital facilities from SBI and EARC (loan I) are additionally secured by way of mortgage of personal property of promoter directors, viz. Mr. Soshil Kumar Jain, Dr. Rajesh Jain and Mr. Sandeep Jain, situated at House No.18 (Middle and Rear Portions), Block No.56, East Park Road, Karol Bagh, New Delhi.

5 The details of immovable properties of the Company mortgaged in favour of SBI CAP Trustee Co. Ltd. (acting as trustee on behalf of the CDR Lenders) to

secure the long-term borrowings and sustainable working capital borrowings as mentioned above, are as under:

i. All parcels of lands admeasuring 96 Bighas 19 Biswas situated at Village Samelheri, Tehsil Derabassi, District S.A.S. Nagar (Mohali), Punjab;

ii. All parcels of land admeasuring 93 Bighas, 12 Biswas and 10 Biswasi situated at Village Samelheri, Tehsil Derabassi, District S.A.S. Nagar (Mohali), Punjab;

iii. All parcels of land admeasuring 26 Bighas 3 biswas comprised in various Khewat/Khatoni Numbers, situated at Village Manpura, Tehsil Baddi, District Solan, Himachal Pradesh;

iv. All parcels of land admeasuring 91 Bighas 1 Biswa, comprised in various Khewat/Khatoni Numbers situated at Village Malpur, Tehsil Baddi, District Solan, Himachal Pradesh;

v. All parcels of Land bearing Plot No. E-4, Phase-2, Area measuring 9435.66 Sq.Yds., situated at Industrial Area S.A.S. Nagar, District S.A.S. Nagar (Mohali), Punjab;

vi. Flat number 3, 4, 203 and 303 situated at Elite Heights Apartment, at municipal no. 6-3-1238/15/1 & 6-3-1238/16 survey no. 32/1, at Somajiguda, Hyderabad, Telangana;

vii. Industrial plot no. A-24, A-25 and A-27 having land measuring 718.92 sq yds each at Block B-1 Extension and Industrial plot no. E-12 having land measuring 1,372.52 sq yds at Block B-1, situated at Mohan Co-operative Industrial Estate, Mathura Road, New Delhi;

viii. Plot no.35 & 36 measuring 900 sq. yds. each at Silver City Main, Village Bishanpura, MC Zirakpur, Tehsil Dera Bassi, District SAS Nagar (Mohali), Punjab;

ix. 80 flats, i.e., 20 flats comprising in blocks: A-2 bearing no.101 to 104, 201 to 204, 301 to 304, 401 to 404 & 501 to 504 each having super area 1495 sqft and 60 flats in block B-10, B-11, B-12 bearing no.101 to 104, 201 to 204, 301 to 304, 401 to 404 & 501 to 504 each having super area 1161 sqft (30 flats) and super area 1186 sq ft (30 flats) in building built on land measuring 28 bigha 11 biswa in khewat khatoni no: 89/91 comprised in khasra no: 1747(4-12), khewat khatoni no: 168/194 khasra no: 1970/1746 (1-15), 1971/1746(3-0), 1748(9-0) khewat khatoni no: 339/333 khasra no: 1749 (4-11),1750(5-13), kitas 6, village Bhatoli Kalan, Hadbast no. 214, Pargna Dharampura, Tehsil Baddi, District Solan, H.P.

x. Flat no. 201 at Samarpan Complex, village Chakala, Taluka Andheri (East), Mumbai;

xi. Flat no. 401, 601 in A-wing and Flat no. 214 in C-wing situated at Progressive''s Signature Tower, plot no: 53/54 sector-6, Ghansoli, Navi Mumbai;

xii. Residential premises no. 703, 704, 903, 904 and 1001 to 1004 in wing "B" of Sagar Heights Building F; and Commercial premises no. 707 to 712, 714 to 718, 808 to 812 and 814 to 818 in Sagar Tech Plaza- Building A, all situated at CTS no . 721/A, 721B, & 721/1 survey no: 14,15,2052, at village Mohili, Andheri Kurla Road, Andheri (East), Mumbai; and

xiii. Industrial plot no. Gen-72/3, land measuring 5518 sq. mts. in the Trans Thane Creek Industrial Area, Navi Mumbai.

C. Repayment terms and security of the loans outside the CDR Scheme:

1 Rupee term loan from BIRAC for H1N1 project, with amount outstanding of Rs. 44.00 million (March 31, 2017: Rs.70.00 million; April 1, 2016: Rs. 70.00 million), was rescheduled in the financial year 2015-16. It is repayable in ten equal half-yearly instalments commencing from March 31, 2017. This loan is secured by way of hypothecation of all equipment, apparatus, machineries, machineries spares, tools and other accessories, goods and/or other movable property (both present and future) of the Company by way of first charge on pari-passu basis.

2 Rupee term loan from BIRAC for Streptococcus project, with amount outstanding of Rs. 12.00 million (March 31, 2017: Rs. 15.00 million; April 1, 2016: Rs. 15.00 million), is repayable in ten equal half-yearly instalments commencing from May 29, 2017 and is secured by way of hypothecation of all equipment, apparatus, machineries, machineries spares, tools and other accessories, goods and/or other movable property (both present and future) of the Company by way of first charge on pari-passu basis.

3 The unsecured rupee term loan from DST of Rs. 8.00 million (March 31, 2017: Rs. 10.00 million; April 1, 2016: Rs. 12.00 million), is for specific project and is repayable in ten equal annual instalments commencing from September 2012.

4 Rupee term loan from TDB of Rs. 5.56 million as at March 31, 2017 (Rs. 8.33 million as at April 1, 2016), was for oncology project and has been repaid in full along with accrued interest on May 01, 2017. Rupee term loan from TDB of Rs. 57.98 million as at March 31, 2018 (March 31, 2017: Nil; April 1, 2016: Nil) is for Dengue vaccine project and is repayable in nine equal half-yearly instalments commencing from July 1, 2020 and is secured by way of first pari-passu charge (i) on the whole of the moveable properties of the Company including its movable plant and machinery, machinery spares, tools and accessories and other movables both present and future except book debts; and (ii) mortgage of immovable properties of the Company being land admeasuring 1011.11 sq. yards, situated at Plot no. 37, Sector 21-A, U


Mar 31, 2017

C. Repayment terms and security of the loans outside the CDR Scheme: (refer note 46)

1. Rupee term loan from BIRAC for H1N1 project, with amount outstanding of Rs.70.0 million (previous year Rs.70.0 million), was rescheduled in the previous year. It is repayable in ten equal half-yearly installments commencing from March 31, 2017. This loan is secured by way of hypothecation of all equipment, apparatus, machineries, machineries spares, tools and other accessories, goods and/or other movable property (both present and future) of the Company by way of first charge on pari-passu basis.

2. Rupee term loan from BIRAC for Streptococcus project, with amount outstanding of Rs.15.0 million (previous year Rs.15.0 million), is repayable in ten equal half-yearly installments commencing from May 29, 2017 and is secured by way of hypothecation of all equipment, apparatus, machineries, machineries spares, tools and other accessories, goods and/or other movable property (both present and future) of the Company by way of first charge on pari-passu basis.

3. Rupee term loan from TDB of Rs. 5.6 million (previous year Rs. 8.4 million), is for specific project and is repayable in nine equal half-yearly installments commencing from January 2015 and is secured by way of first pari-passu charge (i) on the whole of the moveable properties of the Company including its movable plant and machinery, machinery spares, tools and accessories and other movables both present and future except book debts; and (ii) mortgage of immovable properties of the Company being land admeasuring 1011.11 sq. yards, situated at Plot no. 37, Sector 21-A, Urban Estate Faridabad, Haryana. The loan is also collaterally secured by personal guarantees of the two promoter directors of the Company, viz. Dr. Rajesh Jain and Mr. Sandeep Jain. This loan has been repaid in full along with accrued interest on May 01, 2017.

4. The unsecured rupee term loan from DST of Rs.10 million (previous year Rs.12 million), is for specific project and is repayable in ten equal annual installments commencing from September 2012.

Notes:

a) i) Includes income tax demand of Rs.162.2 million in respect to AY 2005-06. The Income Tax Department had issued demand based on certain grounds related to purchases made by the Company from an overseas vendor. The matter was decided in favour of the Company and the demand was cancelled by CIT (Appeals). However, the Income Tax Department has filed appeal before Income Tax Appellate Tribunal ("ITAT”) against the order of CIT (Appeals) which is pending at present. The Company believes that it has merit in these cases, hence no provision is required.

ii) A search operation was conducted by the Income Tax Department in the premises of the Company in January 2012 and hence the Company had re-filed the income tax returns for the Assessment Years 2006-07 to 2012-13. During the year ended March 31, 2015, the Income Tax Department completed the assessment of the said years, disallowed certain expenses and issued demand of Rs.3,294.9 million (including interest) on various grounds. The Company preferred appeals before the CIT (Appeals) against the orders of the Income Tax Department. The appeals were decided in favour of the Company and the demand was cancelled. However, CIT (Appeals) has made certain disallowances with respect to AY 2010-11 & AY 2011-12 against which the Company has filed appeals before the ITAT. The Income Tax Department has also filed appeals before ITAT against the orders of CIT (Appeals). The appeals before ITAT are pending at present. Based on legal advice, the Company believes that it has merits in these cases, hence no provision is required.

b) In respect of custom duty demand, the Assessing Officer levied custom duty on certain exempted items imported by the Company. The Company has deposited the entire amount of demand under protest amounting to Rs.4.0 million and the matter is pending before Hon''ble Customs, Excise and Service Tax Appellate Tribunal ("CESTAT”). The Company believes that it has merit in its case, hence no provision is required.

c) In respect of service tax demands for the FY 2003-04 to FY 2011-12, the Assessing Officer levied service tax on foreign services rendered and delivered outside India by the Company and certain other services on which there was no liability to pay service tax. The cases are currently pending with CESTAT. The Company believes that it has merit in its case, hence no provision is required.

d) In respect of service tax demands for the FY 2008-09 to FY 2010-11, service tax department has disallowed CENVAT Credit of input services availed and distributed by the Company as input service distributor. The case is currently pending with CESTAT. The Company believes that it has merit in its case, hence no provision is required.

ii) The Company had manufactured and offered supply of certain vaccines which were manufactured against the confirmed order received from the Ministry of Health and Family Welfare (MOH&FW). Some quantities of vaccines were supplied during December 2011, the balance could not be supplied in view of disputes with respect to delivery dates and in the meantime the stock of such vaccines amounting to Rs.74.1 million expired. Further, the Company had also received advance market commitment (AMC) amounting to Rs.100 million against these vaccines. The refund of the advance so received (after adjusting the amount receivable against the vaccines already supplied) was demanded back by MOH&FW along with interest on account of non-supply of balance quantities of vaccines. In view of above disputes, the Company obtained a stay order from the Hon''ble Delhi High Court against recovery of said amount, till the disputes are finally resolved through arbitration. While the arbitral proceedings are on, the Company believes that the entire amount in respect of above supplies (after adjusting the AMC amount) including the amount of expired stock and applicable interest thereon is recoverable and no interest is payable on the said AMC amount. Based on legal advice, no adjustment in respect of the expired stock and the interest amount has been made in the financial statements.

b) Other commitments :

i) Export commitments of Rs.1,331.4 million (Previous year Rs.983.6 million) under advance licenses schemes.

ii) The Company has received financial assistance in the form of soft loan under various projects from Department of Biotechnology and Department of Science & Technology respectively. As per the terms of related agreements, the Company is also required to incur expenditure in form of monetary contribution to the relevant project. Further, the Company has to repay these loans as per terms of respective agreement. The amount of commitment is not quantifiable.

iii) The Company had executed an agreement dated January 01, 2014, with other shareholders of its subsidiary company, viz. New Rise Healthcare Private Limited to acquire the remaining stake in the said subsidiary company, subject to certain conditions. During the year, the Company purchased part of these shares at an aggregate value of Rs.9.8 million. As per the terms of the agreement, the Company was required to pay further amount of Rs.79.7 million towards purchase of balance shares. The Company has purchased the said balance shares also on April 19, 2017.

iv) For commitments relating to lease arrangements, refer note 35.

5. Related Party Disclosures

A. Names of related parties and related party relationships

i) Parties where control exists

Subsidiaries: - Radhika Heights Limited ("RHL”) (Wholly-owned subsidiary ("WOS”))

- Cabana Construction Private Limited (Indirect WOS ("IWOS”) through RHL)

- Cabana Structures Limited (IWOS through RHL)

- Nirmala Buildwell Private Limited (IWOS through RHL)

- Nirmala Organic Farms & Resorts Private Limited (IWOS through RHL)

- Radicura Infra Limited (IWOS through RHL)

- Sunanda Infra Limited (IWOS through RHL)

- Rees Investments Limited ("Rees”), Guernsey (WOS)

- Kelisia Holdings Limited ("KHL”), Cyprus (IWOS through Rees) (liquidated on January 04, 2017)

- Panacea Biotec (International) SA ("PBS”), Switzerland (WOS)

- Panacea Biotec Germany GmbH ("PBGG”), Germany (IWOS through PBS)

- Panacea Biotec GmbH, Germany (WOS) (liquidated on March 7, 2016)

- NewRise Healthcare Private Limited ("NewRise”), (Subsidiary until April 18, 2017, WOS during April 19 and April 20, 2017) (refer note 52)

ii) Other related parties with whom transactions have taken place during the year

a) Joint Ventures: - Adveta Power Private Limited ("Adveta”)

- Chiron Panacea Vaccines Private Limited ("CPV”) (Under liquidation) (refer note 36 (c))

b) Associates: - PanEra Biotec Private Limited ("PanEra”)

c) Key Management - Mr. Soshil Kumar Jain - Chairman and Whole-time Director

Personnel: - Mr. Ravinder Jain - Managing Director

- Dr. Rajesh Jain - Joint Managing Director

- Mr. Sandeep Jain - Joint Managing Director

- Mr. Sumit Jain - Whole-time Director

- Mr. Ankesh Jain - Whole-time Director

- Mr. Vinod Goel - Group CFO and Head Legal & Company Secretary

- Mr. Devender Gupta - Chief Financial Officer & Head Information Technology

(d) Relatives of Key Management personnel having transactions with the Company:

- Mr. Ashwani Jain, son-in-law of Mr. Soshil Kumar Jain

- Mr. Shagun Jain, son-in-law of Mr. Ravinder Jain

- Mrs. Radhika Jain, daughter of Mr. Ravinder Jain

- Mrs. Shilpy Jain, wife of Mr. Sumit Jain

- Mr. Harshet Jain, son of Dr. Rajesh Jain

(e) Enterprises over which Person(s) (having control or significant influence over the Company / Key management personnel(s), along with their relatives) are able to exercise significant influence:

- Neophar Alipro Limited ("Neophar”)

- Lakshmi & Manager Holdings Limited ("LMH”),

- Trinidhi Finance Private Limited ("Trinidhi”) subsidiary of LMH

- Best General Insurance Company Limited (subsidiary of LMH)

- First Lucre Partnership Co. (holding shares in the Company)

- White Pigeon Estate Private Limited

- OKI Estate Private Limited

* Closing exchange rate has been rounded offto two decimal places.

6. Segment Information

The primary segment reporting format is determined to be business segments as the Company''s risk and rates of return are affected predominantly by differences in the products and services produced and sold. Secondary information is reported geographically between India (domestic) and overseas. The operating businesses are organized and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

Business segments:

The Company is engaged in the business of research, development, manufacture and marketing of vaccines and pharmaceutical formulations. The Company has products for various therapeutic segments, which include renal disease management, nephrology, oncology, diabetes management and pediatric vaccines.

ii. For assets taken on operating lease agreements:

a) The Company has taken various residential, office and go down premises under operating lease agreements. These are generally cancellable and are renewable by mutual consent on mutually agreed terms. There are no sublease payments expected to be received under non-cancellable subleases at the balance sheet date and no restriction is imposed by lease arrangements.

b) Lease payments for the year are Rs.19.7 million (Previous year Rs.33.1 million).

c) The Company had entered into "Dissolution of Joint Venture Agreement” dated November 30, 2012 with respect to its Joint Venture Chiron Panacea Vaccines Private Limited, whereby the Joint Venture partners mutually decided for early termination of the Joint Venture Agreement. As per the dissolution agreement, the joint venture agreement between both the partners was terminated w.e.f. January 31, 2013. The liquidation proceedings of the Joint Venture Company are in progress as on March 31, 2017. However, as per the agreement both Joint Venture partners will exercise equal control over the management till the final liquidation of Joint Venture, therefore as per the provisions of Accounting Standard - 27, the Joint Venture Company has been considered as jointly controlled entity for the purpose of preparation of financial statements.

7. In view of absence of profits during financial years 2012-13 and 2013-14, total remuneration paid to the Managing/Joint Managing and Whole time Directors had exceeded the ceiling prescribed in Section II of Part II of Schedule XIII to the Companies Act, 1956 by Rs.29.1 million for the said years. Further, because of non-compliance to one of the conditions of Section II of Part II of Schedule V to the Companies Act, 2013, the remuneration amounting to Rs. 2.6 million paid to a Whole-time Director during the year ended March 31, 2016 and remuneration amounting to Rs.43.0 million paid to six directors (Managing Director, Joint Managing Directors and Whole time Directors) during the year ended March 31, 2017 required approval of the Central Government and the Company had filed the necessary applications in this regard. However, the Company''s applications for approval of the aforesaid excess remuneration have not been approved by the Central Government and consequently the Company is required to recover the excess amount thus paid for the said years unless the recovery thereof is waived by the Central Government. For a thorough reconsideration of the matter, the Company has preferred to submit new applications to the Central Government for waiver of recovery of excess remuneration paid in respect of aforesaid financial years and is also in the process of completing the related procedural formalities. Pending the decision of the Central Government, the Company has recorded an amount of Rs.74.7 million as recoverable from such directors towards such excess remuneration paid. Based on Management''s assessment and legal advice obtained, the Company is confident of a favorable outcome for its applications.

8. For the year ended March 31, 2017, the Company has incurred a loss of Rs.862.5 million (Previous year profit of Rs.8.7 million) including exceptional loss of Rs.375.4 million (Previous year exceptional gain of Rs.496.5 million). The continuous losses have adversely affected the cash flows of the Company. These conditions, read with note

9, indicate the existence of a material uncertainty that may cast significant doubt about the Company''s ability to continue as a going concern. The Company has undertaken several measures to mitigate this risk, which include supply to UNICEF/other customers of pentavalent vaccine; initiating supply of oral polio vaccine from Baddi facility, entering into strategic alliances with domestic as well foreign collaborators for supply of products, launch of innovative new products, viz. CABAPAN (Cabazitaxel), tetravalent vaccine Easy four-TT (DTwp-Hib), hexavalent vaccine Easy Six™ (DTwP-HepB-Hib-IPV), expediting development of new products and monetization of non-core assets, etc. Based on above measures and continuous efforts to improve the business performance and as explained in note 47, the management believes that it would be able to generate sustainable cash flow, recover and recoup the erosion in its net worth through profitable operations, discharge its obligations as they fall due and continue as a going concern.

10. During the financial year 2014-15, the Company was sanctioned a Corporate Debt Restructuring ("CDR”) scheme under the CDR mechanism of the Reserve Bank of India ("RBI”) after attaining supermajority from its lender banks. The debt obligations, including interest thereon, have been measured, classified and disclosed in these financial statements in accordance with the Master Restructuring Agreement ("MRA”) as per CDR scheme, to the extent agreed with the banks. Completion of certain other terms and conditions are in progress and the management is confident that it will be able to comply with all key conditions of the CDR scheme. Subsequently, in the financial year 2015-16, State Bank of Travancore ("SBT”) and State Bank of Mysore ("SBM”) had absolutely assigned all the rights, title and interests in financial assistance granted to the Company, with all the underlying rights, benefits and obligations in favor of Edelweiss Asset Reconstruction Company Limited ("EARC”). EARC restructured the SBT loan during the financial year 2015-16 and also provided ''in principle'' approval for restructuring the SBM loan during the financial year 2016-17, which was acted upon by both parties. Pursuant to the said restructuring of the SBM loan, the Company has recorded Rs.75.5 million as an exceptional item during the current year, being the difference between the original loan amount & interest accrued thereon and the restructured amount. Further, during financial year, the Company has paid all its principal installments and interests with respect to the said restructured loans on time except for the installment due in March 2017 that was delayed due to reasons beyond the Company''s control. The Company had informed EARC about the delay and sought additional time up to April 30, 2017 to pay the said installment. The aforesaid installment was subsequently paid on April 21, 2017 along with necessary additional interest. However, on April 11, 2017, EARC has sought to revoke the restructuring of the loans assigned to it by SBT and SBM and has claimed to reinstate the dues as per the original outstanding to SBT and SBM. The Company has discussed the matter with EARC as well as made presentations with the CDR Empowered Group ("CDR EG”) that the revocation sought by EARC is unjustified and is not in consonance with the CDR guidelines. The matter is currently under consideration at CDR EG. Further, the EARC had informed the total outstanding loan of Rs.1,969.4 million as on March 31, 2017, which in Company''s view is inaccurate and misleading and therefore has been disputed by the Company. As per the Company, the outstanding amount of such loans as on March 31, 2017 is Rs.1,227.2 million including accrued interest thereon. Based on the management''s internal evaluation, legal advice obtained and discussions in the meeting with CDR EG held on May 25, 2017, the Company believes that outcome of the matter will be in Company''s favour and accordingly no adjustments are considered necessary in the books of accounts.

11. During the year ended March 31, 2017, no exchange difference has been capitalized as there were no long term foreign currency monetary items related to acquisition of capital assets. During the financial year 2012-13, the Company exercised the option as per the Companies (Accounting Standards) (Second Amendment) Rules, 2011 whereby, exchange differences related to long term foreign currency monetary items so far as they relate to the acquisition of depreciable capital assets are capitalized or de-capitalized from cost of assets and depreciated over the useful life of the assets. In other cases, such exchange differences are accumulated in a "Foreign currency monetary item translation difference account” and amortized over the balance period of such long term assets/ liabilities. Unamortized balance of "Foreign currency monetary item translation difference account” of Rs.100.2 million (Previous year Rs.207.7 million) as on March 31, 2017 is included in note 4 Reserves and Surplus.

12. As at March 31, 2017, an amount of Rs.536.0 million (Previous year Rs.734.8 million) including interest of Rs.60.3 million (Previous year Rs.56.0 million) was receivable from Company''s wholly owned subsidiary viz. Rees Investments Limited ("Rees”). Pursuant to the accumulated losses in Rees and its other subsidiaries, the Company, in earlier years, had assessed that the loan repayment capability of Rees has continued to be adversely affected. Accordingly, the Company had created ''Provision for bad and doubtful advances'' on the aforesaid loan balance. With a view to make the structure of overseas subsidiaries more efficient and aligned to business objectives and to save management and administrative expenses thereof, during the year the Company has decided to wind up Rees during the current year. Accordingly, in order to achieve the said objective, two set-off and release agreements have been executed on December 31, 2016 among the Company, Rees and the Company''s wholly-owned subsidiaries viz. Panacea Biotec (International) SA ("PBS”) and Panacea Biotec Germany Gmbh ("PBGG”) whereby all the rights and obligations of Rees arising out of the loan agreement between Rees and PBS and between Rees and PBGG, have been assigned and transferred to the Company w.e.f. December 31, 2016. Consequently, the outstanding amounts of its loans of Rs.60.3 million and Rs.198.9 million given by Rees to PBS and PBGG, respectively, as on December 31, 2016 have been assigned in favour of the Company and balance recoverable by the Company from Rees have been reduced to that extent. Subject to necessary regulatory approval. During earlier years, owing to accumulated losses in PBS and PBGG, the aforesaid loans by Rees to PBS and PBGG were also fully provided for in the books of accounts of Rees. Accordingly, the Company has continued to maintain the provision for bad and doubtful advances in respect of the loans receivable (including interest) from Rees, PBS and PBGG.

Further, the process of liquidation of Rees is being initiated and is expected to be completed during financial year 2017-18. Upon such liquidation and after obtaining necessary approvals from Reserve Bank of India, the outstanding balance amount of the loan receivable from Rees shall be written off against the said ''Provision for bad and doubtful advances'' already made in the Company''s books. Accordingly, there will be no impact of such write off on the Company''s profits/losses during the relevant year.

13. During the financial year 2007-08, the Company had given an advance of Rs.176.8 million pursuant to the agreement with Ilyas & Mustafa Galadari Management Investment & Development L.L.C., U.A.E. ("Developer”) for purchase of certain immovable properties in Dubai. The Developer failed to deliver the said properties to the Company and offered other properties under construction in lieu of the said properties. Owing to continuous delays in completion of construction, the Company has initiated legal recourse and issued a legal notice to the Developer. In view of ongoing discussions with the Developer and on the basis of the legal advice obtained, the Company believes that it has valid rights to claim the recovery of the advance paid to the Developer, in the form of either a refund or other properties. The Company believes that the advance given to the Developer is fully realizable as the market value of the properties under discussion is more than the advance given under the original agreement. Accordingly, no adjustments are considered necessary in the books of accounts.

14. As at March 31, 2016, a cumulative amount of Rs.353.4 million recognized by the Company as ''MAT Credit Entitlement'' under the head ''Loans and advances'' represented that portion of MAT liability, which, based on the then future profitability projections, could have been recovered and set off in subsequent years as per the provisions of Section 115JAA of the Income-tax Act, 1961. As at March 31, 2017, the management, based on revised estimates of future profitability projections and other factors disclosed under note 45, expects that recoverable amount of MAT is Rs.318.7 million and accordingly has written off Rs.24.7 million as Tax expense.

15. As at March 31, 2017, the Company held 88.8% of total equity stake in its subsidiary, NewRise Healthcare Pvt. Ltd. The same has been reclassified as current investment as at March 31, 2017 since the Company intends to realize these investments with in the next twelve months. During April 2017, the Company had acquired the remaining equity shares from the minority shareholders therein and subsequently sold the entire 100% equity stake to Narayana Hrudayalaya Ltd. for an enterprise value of Rs.1,800.0 million. The Company has considered the net consideration realized in relation to aforesaid transaction as recoverable amount of investment as at March 31, 2017 and consequently recorded an impairment provision of Rs.450.9 million which has been included in exceptional items. (refer note 26).

16. 0.0 under "Rs. in million” represents amount less than Rs.50,000 and 0.0 under units represents units less than 50,000. Further, the figures shown in the tables may not exactly add up due to rounding off.

17. Previous year figures have been regrouped / reclassified, where necessary, to conform to this year''s classification.


Mar 31, 2016

c) Terms/right attached to equity shares:

The Company has only one class of equity shares having a par value of Re. 1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Company has not declared any dividend for current year and previous year.

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

d) Terms/right attached to 0.5% cumulative non convertible and non participating redeemable preference shares:

During the previous year, the Company had issued 0.5% cumulative non convertible and non participating redeemable preference shares by converting unsecured loan/fixed deposits payable to promoters.

The Company has only one class of preference shares having a par value of Rs.10 per share. The Company declares and pays dividends in Indian Rupees. The dividend if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Company has not declared any dividend for current year and previous year.

The preference shares have been issued for a period of 10 years with an option with the Company as well as preference shareholders for early redemption of preference shares, provided CDR debts are fully serviced and the Company comes out from purview of CDR system. In the event of liquidation of the Company, the holders of preference shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in preference to the equity holders. The distribution will be in proportion to the number of preference shares held by the shareholders.

Notes :

A. Loans under Corporate Debt Restructuring (CDR)

1. All the long-term loans and sustainable working capital borrowings from banks have been restructured under the CDR package approved by the Corporate Debt Restructuring Empowered Group (CDR- EG) on September 24, 2014, except foreign currency term loan from Bank of India.

2. The Company had executed Master Restructuring Agreement (MRA)/other definitive documents with all lender banks, except State Bank of Travancore, on December 27, 2014 with Cut Off Date of October 01, 2013. Under the CDR package, the Company is entitled to reliefs and concessions granted by the banks, effective from the Cut Off Date.

3. Key terms of restructuring of the long-term loans are as under:

i. Tenure: Door to Door 10 Years.

ii. Additional Moratorium of 2 years and 2 months from Cut Off Date.

iii. Repayment of Loans: 32 structured quarterly installments starting from quarter ending December 2015 till September 2023. However, first installment was payable on November 30, 2015 instead of December 31, 2015.

iv. Interest Rate: 11% p.a. (floating), linked to base rates of respective Lenders from October 1, 2013 to September 30, 2018, thereafter rate of interest will increase to 13% w.e.f October 1, 2018.

v. Interest obligations aggregating Rs.1,156.4 million on (i) restructured long-term loans and the foreign currency term loan from Bank of India for a period of 24 months from Cut Off Date; and (ii) on sustainable working capital borrowings for a period of 12 months from Cut Off Date, have been converted into Funded Interest Term Loan (FITL).

vi. The dues aggregating to Rs.842.8 million in the working capital borrowings as on the Cut Off Date have been converted into Working Capital Term Loan (WCTL).

4. The foreign currency term loan (ECB) from Bank of India of US$ 25.0 million is repayable in three equal yearly installments commencing from financial year 2017-18 onwards.

5. The State Bank of Travancore (''SBT'' ) has assigned all the rights, title and interest in the entire outstanding dues owed by the Company together with all the underlying securities and guarantees, comprising its Rupee term loan and sustainable working capital along with all accrued interest thereon, in favour of Edelweiss Asset Reconstruction Company Limited ("EARC") (refer note 47). These loan are part of CDR. The EARC has restructured the entire outstanding of Rs.1,649.5 million for an aggregate principal amount of Rs.1,153.0 million. As result of restructuring of repayment of interest and principal, total liability of Rs.1,900.0 million shall be repaid as per the following terms:

i. Cut off date January 01, 2016

ii. Principal payment of Rs.30.5 million to be paid on or before January 31, 2016

iii. Balance principal amount of Rs.1,122.5 million shall be repaid in 29 structured quarterly installments commencing from the quarter ending March 31, 2016 till the quarter ending March 31, 2023

iv. Interest rate shall be 11% p.a. up to September 30, 2018 and 13% thereafter up to March 31, 2023, payable on quarterly rests along with principal installments.

6. In the current financial year, State Bank of Mysore has absolutely assigned all the rights, title and interests in financial assistances granted to the Company, with all the underlying rights, benefits and obligations in favour of EARC vide assignment agreement dated February 26, 2016. The Company is in process of negotiating the repayment terms with EARC.

B. Securities for the long-term loans and sustainable working capital borrowings:

1. The long-term borrowings, except Rupee term loans from BIRAC, Technology Development Board, and Department of Science & Technology, have been secured by way of (i) first pari-passu charge over entire fixed assets (both present and future) of the Company, by way of mortgage of the immovable properties and hypothecation of all movable fixed assets; (ii) second pari-passu charge over entire current assets (both present and future) of the Company, by way of hypothecation and/or pledge of all current assets including all receivable, finished goods, raw materials, work in progress, consumable stores and spares, book debts and bills receivable; and (iii) personal guarantees by the promoter directors of the Company viz. Mr. Soshil Kumar Jain, Mr. Ravinder Jain, Dr. Rajesh Jain and Mr. Sandeep Jain.

2. The sustainable working capital facilities (fund based, non-fund based, buyer credits etc.) have been secured by way of (i) first pari-passu charge over entire current assets (both present and future) of the Company, by way of hypothecation and/or pledge of all current assets including all receivable, finished goods, raw materials, work in progress, consumable stores and spares, book debts, bills receivable; (ii) second pari-passu charge over entire fixed assets (both present and future) of the Company, by way of mortgage of the immovable properties and hypothecation of all movable fixed assets; and (iii) personal guarantees by the promoter directors of the Company viz. Mr. Soshil Kumar Jain, Mr. Ravinder Jain, Dr. Rajesh Jain and Mr. Sandeep Jain.

3. The long-term borrowings and sustainable working capital facilities restructured under the CDR package have been additionally secured by personal guarantees and pledge of shares held by the promoter directors of the Company viz. Mr. Soshil Kumar Jain, Dr. Rajesh Jain and Mr. Sandeep Jain. The personal guarantee and pledge of shares held by Mr. Ravinder Jain and Mr.Sumit Jain, in the Company, are currently pending.

4. The long-term loans and working capital facilities from SBI are additionally secured by way of mortgage of personal property of promoter directors, viz. Mr. Soshil Kumar Jain, Dr. Rajesh Jain and Mr. Sandeep Jain, situated at House No.18 (Middle and Rear Portions), Block No.56, East Park Road, Karol Bagh, New Delhi.

5. The details of immovable properties of the Company mortgaged in favour of the CDR Lenders to secure the long term borrowings and sustainable working capital borrowings as mentioned above, are as under:

i. All parcels of lands admeasuring 96 Bighas 19 Biswas situated at Village Samelheri, Tehsil Dera Bassi, District S.A.S. Nagar (Mohali) in the State of Punjab;

ii. All parcels of land admeasuring 93 Bighas, 12 Biswas and 10 Biswasi situated at Village Samelheri, Sub Registrar Derabassi, District Patiala in the State of Punjab;

iii. All parcels of land admeasuring 26 Bighas 3 biswas comprised in various Khewat/Khatoni Numbers, situated Village Manpura, Tehsil Nalagarh, District Solan in the State of Himachal Pradesh;

iv. All parcels of land admeasuring 91 Bighas 1 Biswa, comprised in various Khewat/Khatoni Numbers situated Village Malpura, Tehsil Nalagarh, District Solan in the State of Himachal Pradesh;

v. All parcels of Land bearing Plot No. E-4, Phase-2, Area Measuring 9435.66 Sq.Yds., situated at Industrial Area S.A.S. Nagar (Mohali), District S.A.S. Nagar (Mohali), Punjab;

vi. Flat number 3, 4, 203 and 303 situated at Elite Heights Apartment, at municipal n. 6-3-1238/15/1 & 6-3-1238/16 survey no: 32/1, at Somajiguda, Hyderabad;

vii. Industrial plot no. A-24, A-25 and A-27 having land measuring 718.92 sq yds each at Block B-1 Extension and Industrial plot no: E-12 having land measuring 1,372.52 sq yds at Block B-1, situated at Mohan Co-operative Industrial Estate, Mathura Road, New Delhi;

viii. Plot no.35 & 36 measuring 900 sq. yds. each at Silver City Main Village Bishanpura, MC Zirakpur, Tehsil Dera Bassi, District SAS Nagar (Mohali) Punjab;

ix. 80 flats, i.e., 20 flats comprising in block: A-2 bearing no: 101 to 104, 201 to 204, 301 to 304, 401 to 404 & 501 to 504 having super area 1495 sqft and 60 flats in block B-10, B-11, B-12 bearing no: 101 to 104, 201 to 204, 301 to 304, 401 to 404 & 501 to 504 having super area 1161 sqft (30 flats) and super area 1186 sq ft (30 flats) in building built on land measuring 28 bigha 11 biswa in khewat khatoni no: 89/91 comprised in khasra no: 1747(4-12), khewat khatoni no: 168/194 khasra no: 1970/1746 (1-15), 1971/1746(3-0), 1748(9-0) khewat khatoni no: 339/333 khasra no: 1749(4-11),1750(5-13), kitat 6, village Bhatoli Kalan, Hadbat no: 214, Paryna Dharampura, Tehsil Baddi, District Solan, H.P.

x. Flat no. 201 at Samarpan Complex, village Chakala, Taluka Andheri, (East) Mumbai;

xi. Flat no. 401, 601 in A-wing and Flat no. 214 in C-wing situated at Progressive''s Signature Tower, plot no: 53/54 sector-6, Ghansoli, Navi Mumbai;

xii. Residential premises no. 703, 704, 903, 904 and 1001 to 1004 in wing "B" of Sagar Heights Building F; and Commercial premises no. 707 to 712, 714 to 718, 808 to 812 and 814 to 818 in Sagar Tech Plaza- Building A, all situated at CTS no . 721/A, 721B, & 721/1 survey no: 14,15,20 52,at Mohili village Andheri Kurla, Road Greater Mumbai; and

xiii. Industrial plot no, Gen-72/3, land measuring 5518sqmts in the Trans Thane Creek Industrial Area, Navi Mumbai.

C. Repayment terms and security of the loans outside the CDR Scheme: (refer note 46)

1. Rupee term loan from BIRAC (formerly known as Department of Biotechnology) for H1N1 project, with amount outstanding of Rs.70.0 million (previous year Rs.70.0 million), has been rescheduled during the year. It is now repayable in ten equal half-yearly installments commencing from March 31, 2017. This loan is secured by way of hypothecation all equipments, apparatus, machineries, machineries spares, tools and other accessories, goods and/or other movable property (both present and future) of the Company by way of first charge on pari-passu basis.

2. Rupee term loan from BIRAC for Streptococcus project, with amount outstanding of Rs.15.0 million (previous year Rs.15.0 million), is repayable in ten equal half-yearly installments commencing from one year after the completion of the project and is secured by way of hypothecation all equipments, apparatus, machineries, machineries spares, tools and other accessories, goods and/or other movable property (both present and future) of the Company by way of first charge on pari-passu basis.

3. Rupee term loan from BIRAC for Alopecia project, with previous year outstanding amount of Rs.3.0 million, has been repaid along with interest during the year.

4. Rupee term loan from Technology Development Board (TDB), with amount outstanding Rs.8.34 million (previous year Rs.12.5 million), is for specific project and is repayable in nine equal half-yearly installments commencing from January 2015 and is secured by way of first pari-passu charge (i) on the whole of the moveable properties of the Company including its movable plant and machinery, machinery spares, tools and accessories and other movables both present and future except book debts; and (ii) mortgage of immovable properties of the Company being land admeasuring 1011.11 sq. yards, situated at Plot no. 37, Sector 21-A, Urban Estate Faridabad, Haryana. The loan is also collaterally secured by personal guarantees of the two promoter directors of the Company, viz. Dr. Rajesh Jain and Mr. Sandeep Jain.

5. The unsecured Rupee term loan from Department of Science and Technology, with amount outstanding Rs.12 million (previous year Rs.18 million), is for specific project and is repayable in ten equal annual installments commencing from September 2012.

Notes:

a) i) Includes income tax demand of Rs.162.2 million in respect to AY 2005-06. Income Tax Department issued demand based on certain grounds related

to purchases made by the Company from an overseas vendor. The matter was decided in favour of the Company and the demand was cancelled by CIT (Appeals). However, the Income Tax Department has filed appeal before Income Tax Appellate Tribunal ("ITAT") against the order of CIT (Appeals) which is pending at present. The Company believes that it has merit in these cases, hence no provision is required. ii) A search operation was conducted by Income Tax Department in the premises of the Company in January 2012 and hence the Company has re-filed the income tax return for the Assessment Year 2006-07 to Assessment year 2012-13. During the year March 31, 2015, the Income Tax Department completed the assessment of the said years, disallowed certain expenses and issued demand of Rs.3,294.9 million (including interest) on various grounds. The Company had preferred appeals before the CIT (Appeals) against the order of Income Tax Department. The appeals were decided in favour of the Company and the demand was cancelled, however, CIT (Appeals) has made certain disallowances with respect to AY 2010-11 & AY 201112 against which the Company has filed appeals before the ITAT. The Income Tax Department has also filed appeals before ITAT against the orders of CIT (Appeals). The appeals before ITAT are pending at present. Based on legal advice, the Company believes that it has merit in these cases, hence no provision is required.

b) In respect of custom duty demand, the Assessing Officer levied custom duty on certain exempted items imported by the Company. The Company has deposited the entire amount of demand under protest amounting to Rs.4.0 million and the matter is pending before Hon''ble Customs, Excise and Service Tax Appellate Tribunal ("CESTAT"). The Company believes that it has merit in its case, hence no provision is required.

c) In respect of service tax demands for the FY 2003-04 to FY 2011-12, the Assessing Officer levied service tax on foreign services rendered and delivered outside India by the Company and certain other services on which there was no liability to pay service tax. The cases are currently pending with CESTAT. The Company believes that it has merit in its case, hence no provision is required.

ii) The Company had manufactured and offered supply of certain vaccines which were manufactured against the confirmed order received from the Ministry of Health and Family Welfare (MOH&FW). Some quantities of vaccines were supplied during December 2011, the balance could not be supplied in view of disputes with respect to delivery dates and in the meantime the stock of such vaccines amounting to Rs.74.1 million expired. Further, the Company had also received advance market commitment (AMC) amounting to Rs.100 million against these vaccines. The refund of the advance so received (after adjusting the amount receivable against the vaccines already supplied) has been demanded back by MOH&FW along with interest on account of non-supply of balance quantities of vaccines. In view of above disputes, the Company obtained a stay order from the Hon''ble Delhi High Court against recovery of said amount, till the disputes are finally resolved through arbitration. While the arbitral proceedings are on, the Company believes that the entire amount in respect of above supplies (after adjusting the AMC amount) including the amount of expired stock and applicable interest thereon is recoverable and no interest is payable on the said AMC amount. Based on legal opinion, no adjustment in respect of the expired stock and the interest amount has been made in the financial statements.

b) Other commitments :

i) Export commitments of Rs.983.59 million (Previous year Rs.717.85 million) under advance licenses schemes.

ii) The Company has received financial assistance in the form of soft loan under various projects from Department of Biotechnology and Department of Science & Technology respectively. As per the terms of related agreements, the Company is also required to incur expenditure in form of monetary contribution to the relevant project. Further, the Company has to repay these loans as per terms of respective agreement. The amount of commitment is not quantifiable.

iii) The Company has executed an agreement dated January 01, 2014, with other shareholders of its subsidiary company, namely NewRise Healthcare Private Limited (formerly Umkal Medical Institute Private Limited) to acquire the remaining stake in the subsidiary company. During the previous year, Company had purchased part of these shares at an aggregate value of Rs.4.06 million. As per the terms of the agreement, the Company is required to pay further amount of Rs.89.54 million towards purchase of balance shares and post such purchase of shares, the said subsidiary will become a wholly owned subsidiary company.

iv) For commitments relating to lease arrangements, refer note 35.

6. Related Party Disclosures

A. Names of related parties and related party relationships

i) Parties where control exists

Subsidiaries - Radhika Heights Limited ("RHL”) (formerly Best On Health Limited) (Wholly-owned subsidiary ("WOS”))

- Radicura Infra Limited (formerly Radicura & Co. Limited) (Indirect WOS ("IWOS”) through RHL),

- Nirmala Buildwell Private Limited (formerly Panacea Hospitality Services Private Limited) (IWOS through RHL)

- Cabana Construction Private Limited (formerly Panacea Educational Institute Private Limited) (IWOS through RHL)

- Sunanda Infra Limited (formerly Sunanda Steel Company Limited) (IWOS through RHL)

- Nirmala Organic Farms & Resorts Private Limited (IWOS through RHL)

- Cabana Structures Limited (formerly Best On Health Foods Limited) (IWOS through RHL)

- Rees Investments Limited ("Rees”) (Guernsey) (WOS)

- Kelisia Holdings Limited ("KHL”) (Cyprus) (IWOS through Rees)

- Kelisia Investment Holding AG ("KIH”) (Switzerland) (IWOS through KHL) (liquidated on October 7, 2014)

- Panacea Biotec (International) SA ("PBS”) (Switzerland) (WOS)

- Panacea Biotec Germany GmbH (Germany) (IWOS through PBS)

- Panacea Biotec GmbH (Germany) (WOS) (liquidated on March 7, 2016)

- NewRise Healthcare Private Limited (Formerly Umkal Medical Institute Private Limited) (Subsidiary)

ii) Other related parties with whom transactions has taken place during the year

a) Joint Ventures - Chiron Panacea Vaccines Private Limited (Under liquidation)

- Adveta Power Private Limited,

b) Associates - PanEra Biotec Private Limited

c) Key Management - Mr. Soshil Kumar Jain - Chairman and Whole-time Director Personnel - Mr. Ravinder Jain - Managing Director

- Dr. Rajesh Jain - Joint Managing Director

- Mr. Sandeep Jain - Joint Managing Director

- Mr. Sumit Jain - Whole-time Director

- Mr. Ankesh Jain - Whole-time Director (from April 01, 2016)

- Mr. Vinod Goel - Group Chief Financial Officer and Head Legal & Company Secretary

- Mr. Partha Sarthe De - Chief Financial Officer & Head of IT & BPR (Upto November 30, 2014)

- Mr. Devender Gupta - Chief Financial Officer & Head IT (From May 29, 2015)

d) Relatives of Key Management personnel having transactions with the Company:

- Mr. Ashwani Jain, Son-in-law of Mr. Soshil Kumar Jain

- Mr. Shagun Jain, Son-in-law of Mr. Ravinder Jain

- Mrs. Radhika Jain, Daughter of Mr. Ravinder Jain

- Mrs. Meena Jain, Wife of Dr. Rajesh Jain

- Mrs. Nirmala Jain, Wife of Mr. Soshil Kumar Jain

- Mrs. Shilpy Jain, Wife of Mr. Sumit Jain

- Mr. Ankesh Jain, Son of Dr. Rajesh Jain (KMP w.e.f. April 01, 2016)

- Mr. Harshet Jain, Son of Dr. Rajesh Jain

e) Enterprises over which Person(s) having control or significant influence over the Company / Key management personnel(s), along with their relatives, are able to exercise significant influence:

- Neophar Alipro Limited

- Lakshmi & Manager Holdings Limited ("LMH”) and its subsidiaries, Trinidhi Finance Private Limited and Best General Insurance Company Limited

- First Lucre Partnership Co. (holding shares in the Company)

- White Pigeon Estate Private Limited

- OKI Estate Private Limited

* The Lease term for the assets given on lease vide Agreement for providing Manufacturing Facility, Utilities and Services of Employees with PanEra Biotec Private Limited. As per the said Agreement, during the period of usage, if any facility is used for manufacture of the Company''s Vaccines other than those mentioned therein or the facility remains idle due to insufficiency of orders from the Company, no lease rental shall be payable by PanEra Biotec Private Limited for that relevant period.

ii. For assets taken on operating lease agreements:

a) The Company has taken various residential, office and godown premises under operating lease agreements. These are generally cancellable and are renewable by mutual consent on mutually agreed terms. There is no sublease payments expected to be received under non-cancellable subleases at the balance sheet date and no restriction is imposed by lease arrangements.

b) Lease payments for the year are Rs.33.1 million (Previous year Rs.56.6 million).

c) The Company had entered into "Dissolution of Joint Venture Agreement" dated November 30, 2012 with respect to its Joint Venture Chiron Panacea Vaccines Private Limited (under liquidation), whereby the Joint Venture partners have desired and mutually agreed to an early termination of the Joint Venture Agreement. As per the dissolution agreement, the joint venture between both the partners has been terminated w.e.f. January 31, 2013. The liquidation proceedings of the Joint Venture Company have already commenced and are in progress as on March 31, 2016. However, as per the agreement both Joint Venture partners will exercise equal control over the management till the final liquidation of Joint Venture, therefore as per the provisions of Accounting Standard - 27, the Joint Venture Company has been considered as jointly controlled entity for the purpose of preparation of financial statements.

7. Employee benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is eligible for gratuity on separation from employment at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rs.1.0 million (except in case of Managing/ Joint Managing/ Whole time Directors). The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarizes the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the respective plans.

8. During the year 2013-14, the Company had paid managerial remuneration of Rs.37.5 million. The amount paid as managerial remuneration has exceeded the limits prescribed under Section 198 and 309 read with Part II of Schedule XIII to the Companies Act, 1956 by Rs.13.5 million due to unexpected losses during the year 2013-14. Also, during the FY 2012-13, the Company paid managerial remuneration of Rs.37.2 million which exceeded the limits prescribed in aforesaid provisions of the Act by Rs.13.2 million. During the FY 2013-14, the Company had filed applications to obtain approvals from Central Government in respect to excess remuneration paid for FY 13-14 and FY 12-13. Pending final outcome of the applications filed with the Central Government, no adjustments have been made in the financial statements.

9. During the year ended March 31, 2016, the Company has earned a profit of Rs.8.7 million (Previous year: loss of Rs.652.3 million) after adjusting an exceptional income of Rs.496.5 million (Previous year Rs. Nil). Further, the Company''s accumulated losses have resulted in erosion of more than fifty percent of its peak net worth calculated as per the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). During the earlier years, the continuous losses before exceptional items have also adversely affected the cash flows of the Company. These conditions, read with note 47 below, indicate the existence of a material uncertainty that may cast significant doubt about the Company''s ability to continue as a going concern. The Company has undertaken several measures to mitigate the risk, which include supply to UNICEF/other customers of pentavalent vaccine; certain strategic alliances with foreign collaborators for supply of vaccines and pharma products including three collaboration agreements signed during the financial year 201415. Additionally, as explained in note 47 below, the management has successfully executed the Master Restructuring Agreement (MRA) with the lenders of the Company. The Management is confident that it will be able to comply with all key conditions and successfully implement the MRA. Based on the above measures and continuous efforts to improve the business, the Management believes that it would be able to generate sustainable cash flow, recover and recoup the erosion in its net worth through profitable operations and discharge its obligations as they fall due and continue as a going concern.

10. During the financial year 2014-15, the Company was sanctioned a Corporate Debt Restructuring ("CDR") scheme under the CDR mechanism of the Reserve Bank of India ("RBI") after attaining supermajority from its lender banks, the Company had executed a Master Restructuring Agreement ("MRA") with all lenders banks except SBT on December 27, 2014, with cutoff date of October 01, 2013. During the year, SBT has assigned all the rights, tittle and interest in the entire outstanding dues owed by the Company together with all underlying securities and guaranties, comprising of its Rupee term loan and sustainable working capital along with all accrued interest thereon, in favour of Edelweiss Asset Reconstruction Company Limited ("EARC") (refer note 5(A)(5)). The MRA, inter-alia, provides for waiver of certain existing obligations of the Company, restructuring of repayment terms for principal and interest, reduction/ adjustment in interest rates, conversion of outstanding interest amounts to loan, pledge of entire promoter shareholding as additional security to lenders, promoter undertaking for additional infusion of funds, monitoring oversight and certain restrictive covenants, as defined. The debt obligations, including interest thereon, have been measured, classified and disclosed in these financial statements in accordance with the MRA, to the extent agreed with the banks. Reconciliations with certain banks and completion of other terms and conditions are in process.

During the year, State Bank of Mysore has absolutely assigned all the rights, title and interests in financial assistances granted to the Company, with all the underlying rights, benefits and obligations in favour of EARC vide assignment agreement dated February 26, 2016. The Company is in process of negotiating the repayment terms with EARC.

11. During the year ended March 31, 2016, no exchange difference has been capitalized as there were no long term foreign currency monetary items related to acquisition of capital assets. During the financial year 2012-13, the Company exercised the option as per the Companies (Accounting Standards) (Second Amendment) Rules, 2011 whereby, exchange differences related to long term foreign currency monetary items so far as they relate to the acquisition of depreciable capital assets are capitalised or de-capitalised from cost of assets and depreciated over the useful life of the assets. In other cases, such exchange differences are accumulated in a "Foreign currency monetary item translation difference account" and Amortized over the balance period of such long term assets/ liabilities. Unamortized balance of "Foreign currency monetary item translation difference account" of Rs.207.7 million (Previous year Rs.202.0 million) as on March 31, 2016 is included under the head "Reserve and surplus".

12. As at March 31, 2016, an amount of Rs.734.8 million (previous year Rs.678.8 million) including interest of Rs.56.0 million (previous year Rs.48.7 million) is receivable from its wholly owned subsidiary viz. Rees Investment Limited ("Rees"). Pursuant to the accumulated losses in Rees and its other subsidiaries, the Company assessed that the loan repayment capability of Rees Investments Limited has been adversely affected. Accordingly, the amount of Rs.734.8 million (Previous year Rs.678.8 million) has been provided for as ''Provision for bad and doubtful advances''. The above transactions are in the ordinary course of business.

13. The Company had given an advance of Rs.176.8 million (USD3.4 million) in financial year 2007-08 pursuant to the agreements for acquiring certain properties from Ilyas & Mustafa Galadari Management Investment & Development L.L.C., U.A.E. ("Ilyas"). As per the said agreements, the properties were expected to be handed over in financial year 2008-09. However, due to inordinate delays in completion of project, properties could not be delivered to the Company in time. After extensive discussions and negotiations, the Company has executed new agreements with them, as per which the Company will get 1 commercial unit and 8 residential units in Wadi Walk Project (having combined area more than that of properties agreed earlier) for a consideration equivalent to the advance given earlier. The said project is also likely to be delayed and may be cancelled. As such the said Builder has offered two villas situated in the City of Dubai, which is under construction and is likely to get completed by June, 2017 and the Company is also open to accept this offer. The possession of these new properties is expected in financial year 2017-18. The Company believes that the market value of the properties is more than the advance given under the earlier agreements; therefore, no adjustment is required to be provided for in respect of the advance so given.

14. The Company avails CENVAT credit on input and input services used as per the provision of the relevant applicable laws. Balance with excise and custom, etc. amounting to Rs.113.6 million (previous year Rs.99.5 million) under the head ''Loans and Advances'', includes an amount of Rs.71.6 (previous year Rs.58.6 million) million which relates to accumulated amount of CENVAT Credit availed by the Company on input services utilized by it. The Central Excise exemption applicable to Company''s manufacturing facilities at Baddi has expired on March 31, 2016. Therefore the accumulated amount of CENVAT credit will be utilized against the excise duty payable during the financial year 2016-17 onwards.

15. The assets of Rs.343.4 million (Previous year Rs.333.6 million) recognized by the Company as ''MAT Credit Entitlement'' under the head ''Loans and advances'' represents that portion of MAT liability, which can be recovered and set off in subsequent years based on provisions of Section 115JAA of the Income-tax Act, 1961. The management, based on the future profitability projections and other factors disclosed under note 45, is of the view that there would be sufficient taxable income in foreseeable future, which will enable the Company to utilize MAT credit assets as per the relevant provisions of the Income-tax Act, 1961. The management is confident that no losses are expected in this regard and accordingly no adjustment is required in the financial statements.

16. 0.0 under "Rs. in million" represents amount less than Rs.50,000 and 0.0 under units represents units less than 50,000.

17. Previous year amount have been regrouped / reclassified, where necessary, to confirm to this year''s classification.


Mar 31, 2015

1. Corporate information

Panacea Biotec Limited ("the Company") is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on stock exchanges in India. The Company is one of the India's leading research based health management companies engaged in the business of research, development, manufacture and marketing of branded Pharmaceutical Formulations and Vaccines. The Company has products for various segments, which include pain management, diabetes management, organ transplantation, oncology and pediatric vaccines.

2. Basis of Preparation

The financial statements have been prepared on going concern basis under the historical cost basis, in accordance with the generally accepted accounting principles in India and in compliance with the applicable accounting standards ("AS") specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended). All assets and liabilities have been classified as current or non-current as per the companies operating cycle and other criteria set out in the Companies Act, 2013.

3 i) Contingent Liabilities (to the extent not provided for)

(Rs. in million)

Particulars As at As at March 31 , 2015 March 31 , 2014

Disputed demands/show-cause notices under:-

a) Income tax cases (refer note (a) below) 3,457.1 167.0

b) Customs duty cases (refer note (b) below) 4.0 4.0

c) Central excise duty cases (refer note (c) below) - 6.6

d) Service tax (refer note (d) below) 72.6 72.6

Total 3,533.7 250.2

Bank guarantee 39.6 99.8

Labour cases (in view of large number of cases, it is impracticable to disclose each case) 1.3 1.5

Notes:

a) i) Includes income tax demand of Rs.162.2 million in respect to AY 2005-06. Income tax department raised demand based on certain ground related with purchase made by the Company from an overseas party. Out of total demand of Rs.162.2 million, Rs.96.6 million has been set of by the tax authorities from the refund due to the Company from the department pertaining to various years .The matters related to Income Tax demand are still pending with CIT (Appeals). The Company believes that it has merit in these cases, hence no provision is required.

ii) A search operation was conducted by Income Tax department in the premises of the Company in January, 2012 and hence Company has fled the income tax return for the Assessment Year 2006-07 to Assessment year 2012-13.The Income Tax department has completed the Income Tax assessment and disallowed certain expenses and raised the income tax demand of Rs.3,294.9 million (including interest) has been raised on various grounds. The Company has preferred appeals before the CIT (Appeals) towards the order of Income Tax department and based on the legal opinion the Company is hopeful that the Income Tax demand shall be deleted in appeal.

b) In respect of custom duty demand, the Assessing Offer levied custom duty on certain exempted items imported by the Company. The Company has deposited the entire amount of demand under protest amounting to Rs.4.0 million and the matter is pending before Hon'ble Customs, Excise and Service Tax Appellate Tribunal. The Company believes that it has merit in its case, hence no provision is required.

c) In respect of central excise duty demand, the Assessing Offer levied excise duty on common inputs used in manufacture of exempted and taxable products. During the year, the matter has been decided in favour of the Company by the Hon'ble Customs, Excise and Service Tax Appellate Tribunal.

d) In respect of service tax demand for FY 2003-04 to FY 2011-12, the Assessing Offer levied service tax on foreign services rendered & delivered outside India by the Company & certain others services on which there was no liability to pay service tax. The Company believes that it has merit in its case, hence no provision is required.

ii) The Company had manufactured and offered supply of certain vaccines which were manufactured against the confirmed order received from the Ministry of Health and Family Welfare (MOH&FW). Some quantities of vaccines were supplied during December 2011, the balance could not be supplied in view of disputes with respect to delivery dates and in the meantime the stock of such vaccines amounting to Rs.74.1 million expired. Further, the Company had also received advance market commitment (AMC) amounting to Rs.100 million against these vaccines. The refund of the advance so received (after adjusting the amount receivable against the vaccines already supplied) has been demanded back by MOH&FW along with interest on account of non-supply of balance quantities of vaccines. In view of above disputes, the Company obtained a stay order from the Hon'ble Delhi High Court against recovery of said amount, till the disputes are finally resolved through arbitration. While the arbitral proceedings are on, the Company believes that the entire amount in respect of above supplies (after adjusting the AMC amount) including the amount of expired stock and applicable interest thereon is recoverable and no interest is payable on the said AMC amount. Based on legal opinion, no adjustment in respect of the expired stock and the interest amount has been made in the financial statements.

4. Related Party Disclosures

A. Names of related parties and related party relationships

i) Parties where control exists

Subsidiaries - Radhika Heights Limited ("RHL") (formerly Best On Health Limited) (Wholly-owned subsidiary ("WOS"))

Radicura Infra Limited (formerly Radicura & Co. Limited). ((Indirect WOS ("IWOS") through RHL), Nirmala Buildwell Private Limited (formerly Panacea Hospitality Services Private Limited). (IWOS through RHL) Cabana Construction Private Limited (formerly Panacea Educational Institute Private Limited). (IWOS through RHL) Sunanda Infra Limited (formerly Sunanda Steel Company Limited). (IWOS through RHL) Nirmala Organic Farms & Resorts Private Limited (IWOS through RHL) Cabana Structures Limited (formerly Best On Health Foods Limited). (IWOS through RHL) Rees Investments Limited ("Rees") (Guernsey): (WOS) Kelisia Holdings Limited ("KHL") (Cyprus) (IWOS through Rees)

Kelisia Investment Holding AG ("KIH") (Switzerland) (IWOS through KHL) (liquidated on October 7,2014) Panacea Biotec (International) SA ("PBS") (Switzerland) (WOS) Panacea Biotec Germany GmbH (Germany) (IWOS through PBS) Panacea Biotec GmbH (Germany) (WOS) (under liquidation) Panacea Biotec FZE, (UAE) (WOS) (liquidated on June 18,2013) NewRise Healthcare Private Limited (Formerly Umkal Medical Institute Private Limited): (Subsidiary)

ii) Other related parties with whom transactions has taken place during the year:

a) Joint Ventures - Chiron Panacea Vaccines Private Limited (Under liquidation)

- Adveta Power Private Limited,

b) Associates - PanEra Biotec Private Limited

c) Key Management - Mr. Soshil Kumar Jain - Chairman and Whole-time Director Personnel - Mr. Ravinder Jain - Managing Director

- Dr. Rajesh Jain - Joint Managing Director

- Mr. Sandeep Jain - Joint Managing Director

- Mr. SumitJain - Whole-time Director

- Mr. Vinod Goel - Group CFO and Head Legal & Company Secretary

- Mr. Partha Sarthe De - Chief Financial Offer (Upto November 30,2014)

- Mr. Devender Gupta - Chief Financial Offer & Head Information Technology (w.e.f. May 29,2015)

(d) Relatives of Key Management personnel having transactions with the Company:

Mr. Ashwani Jain, Son-in-law of Mr. Soshil Kumar Jain

Mr. Shagun Jain, Son-in-law of Mr. Ravinder Jain

Mrs. Nirmala Jain, Wife of Mr. Soshil Kumar Jain

Mrs. Sunanda Jain, Wife of Mr. Ravinder Jain

Mrs. Meena Jain, Wife of Dr. Rajesh Jain

Mrs. Radhika Jain, Daughter of Mr. Ravinder Jain

Mrs. Shilpy Jain, Wife of Mr. Sumit Jain

Mr. Ankesh Jain, Son of Dr. Rajesh Jain

Mr. Harshet Jain, Son of Dr. Rajesh Jain

(e) Enterprises over which Person(s) having control or significant influence over the Company / Key management personnel(s), along with their relatives, are able to exercise significant influence:

Neophar Alipro Limited

Lakshmi& Manager Holdings Limited ("LMH") and its subsidiaries, Trinidhi Finance Private Limited and Best General Insurance company Limited

First Lucre Partnership Co. (holding shares in the Company)

5. Segment Information

The primary segment reporting format is determined to be business segments as the company's risk and rates of return are affected predominantly by differences in the products and services produced and sold. Secondary information is reported geographically. The operating businesses are organized and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

Business segments:

The Company is engaged in the business of research, development, manufacture and marketing of Vaccines and Branded Pharmaceutical Formulations. The Company has products for various segments, which include pediatric vaccines, pain management, diabetes management and organ transplantation.

6. Employee benefits

The Company has a defend benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rs.1.0 million (except in case of Managing/ Joint Managing/ Whole time Directors). The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarises the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the respective plans.

7. During the year 2013-14, the Company had paid managerial remuneration of Rs.37.5 million. The amount paid as managerial remuneration has exceeded the limits prescribed under Section 198 and 309 read with Part II of Schedule XIII to the Companies, Act, 1956 by Rs.13.5 million due to unexpected losses during the previous year. Also, during the FY 2012-13 the Company paid managerial remuneration of Rs.37.2 million which exceeded the limits prescribed in aforesaid provisions of the Companies Act by Rs.13.2 million. During the FY 2013-14, the Company had fled applications to obtain approvals from Central Government in respect to excess remuneration paid for FY 13-14 and FY 12-13. Pending outcome of the application filled with the Central Government, no adjustments have been made in the financial statements.

8. During the year ended March 31, 2015, the company has incurred losses of Rs.652.3 million (Previous year: Rs.4.2 million after adjusting exceptional income of Rs.2,970.1 million). Further, the Company's accumulated losses have resulted in erosion of more than fifty percent of its peak net worth calculated as per the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The continuous losses have also adversely affected the cash flows of the Company. These conditions, read with note 46 below, indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. The Company has undertaken several measures to mitigate the risk, which include supply to UNICEF/other customers of pentavalent vaccine; certain strategic alliances with foreign collaborators for supply of vaccines and pharma products including three collaboration agreements signed during the year ended March 31, 2015; Additionally, as explained in note 47 below, the management has successfully executed the MRA with the lenders of the Company. Management is confident that it will be able to comply with all key conditions and successfully implement the MRA. Based on the above measures and continuous efforts to improve the business, Management believes that it would be able to generate sustainable cash flow, recover and recoup the erosion in its net worth through profitable operations, discharge its obligations as they fall due and continue as a going concern.

9. During the year, the Company has executed a Corporate Debt Restructuring (CDR) scheme under the CDR mechanism of the Reserve Bank of India ('RBI'). In accordance with the approved CDR scheme and after attaining super-majority with all banks except one, the Company executed a Master Restructuring Agreement (MRA) with the lenders on 27 December 2014, with an effective date of 01 October 2013. The MRA, inter-alia, provides for waiver of certain existing obligations of the Company, restructuring of repayment terms for principal and interest, reduction/ adjustment in interest rates, conversion of outstanding interest amounts to loan, pledge of entire promoter shareholding as additional security to lenders, promoter undertaking for additional infusion of funds, monitoring oversight and certain restrictive covenants, as defend. The debt obligations, including interest thereon, have been measured, classified and disclosed in these financial statements in accordance with the MRA, to the extent agreed with the banks. However, MRA implementation is subject to reconciliations with certain banks and completion of other terms and conditions.

10. During the year ended March 31, 2015, no exchange difference has been capitalised as there were no long term foreign currency monetary items related to acquisition of capital assets. During the financial year 2012-13, the Company exercised the option as per the Companies (Accounting Standards) (Second Amendment) Rules, 2011 whereby, exchange differences related to long term foreign currency monetary items so far as they relate to the acquisition of depreciable capital assets are capitalised or de-capitalised from cost of assets and depreciated over the useful life of the assets. In other cases, such exchange differences are accumulated in a "Foreign currency monetary item translation difference account" and amortised over the balance period of such long term assets/ liabilities. Unamortised balance of "Foreign currency monetary item translation difference account" of Rs.202.0 million (Previous year Rs.196.8 million) as on March 31, 2015 is included under the head "Reserve and surplus".

11. As at March 31, 2015, an amount of Rs.678.8 million (previous year Rs.630.1 million) including interest of Rs.48.7 million (previous year Rs.94.6 million) is receivable from its wholly owned subsidiary viz. Rees Investment Limited (Rees) Pursuant to the accumulated losses in Rees & its other subsidiaries, the Company assessed that the loan repayment capability of Rees Investments Limited has been adversely affected. Accordingly, the amount of Rs.678.8 million (Previous year Rs.630.1 million) has been provided for as 'Provision for bad and doubtful advances'.

12. The Company had given an advance of Rs.176.8 million (USD 3.4 million) in financial year 2007-08 pursuant to the agreements for acquiring certain properties from Ilyas & Mustafa Galadari Management Investment & Development L.L.C., U.A.E. (Ilyas). As per the said agreements, the properties were expected to be handed over in financial year 2008-09. However, due to inordinate delays in completion of project, properties could not be delivered to the Company in time. After extensive discussions and negotiations, the Company has entered into new agreements with them, as per which the Company will get 1 commercial unit and 8 residential units (having combined area more than that of properties agreed earlier) for a consideration equivalent to the advance given earlier. The possession of new properties is expected in financial year 2015- 16. The Company believes that the market value of the properties is more than the advance given under the earlier agreements; therefore, no adjustment is required to be provided for in respect of the advance.

13. The Company avails CENVAT credit on input and input services used as per the provision of the relevant applicable laws. Balance with excise, custom etc. amounting to Rs.99.5 million under the head Loans & Advances, includes an amount of Rs.58.6 million which relates to accumulated amount of CENVAT Credit availed by the company on input services utilised by it. With the current level of excisable manufacturing activities, the Company utilises lesser amount of CENVAT credit as compared to the amount so accumulated every year of CENVAT credit on such input services. However, as per the provisions of service tax laws, there is no time limit on utilisation of CENVAT Credit availed. Therefore, based on future business plans, the Company is confident that it will be able to fully utilise the accumulated amount of CENVAT Credit so availed by distributing it to its manufacturing units and utilising it in subsequent years.

14. The assets of Rs.333.6 million (Previous year Rs.352.5 million) recognized by the Company as 'MAT Credit Entitlement' under the head 'Loans and advances' represents that portion of MAT liability, which can be recovered and set of in subsequent years based on provisions of Section 115JAA of the Income Tax Act, 1961. The management, based on the future profitability projections and other factors disclosed under note 45, is of the view that there would be sufficient taxable income in foreseeable future, which will enable the Company to utilize MAT credit assets as per the relevant provisions of the Income Tax Act, 1961. The management is confident that no losses are expected in this regard and accordingly no adjustment is required in the financial statements.

15. The Company has received Research & Development (R&D) fees of Rs.149.9 million and Rs.47.3 million from a customer during quarters ended June 30, 2014 and December 31, 2014, respectively and has accounted for these as income. Such R&D fees are non-refundable subject to certain pre-conditions (as defend in the agreement) being met by the Company. As the product is already available in the domestic market, the Company is reasonably certain of meeting the pre-conditions and therefore believes that the said fees should be accounted for as income.

16. 0.0 under "Rs. in million" represents amount less than Rs.50,000 and 0.0 under units represents units less than 50,000.

17. Previous year figures have been regrouped / reclassified, where necessary, to conform to this year's classification.


Mar 31, 2014

1. Corporate information

Panacea Biotec Limited ("the Company") is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on stock exchange in India. The Company is one of the India''s leading research based health management companies engaged in the business of research, development, manufacture and marketing of branded Pharmaceutical Formulations and Vaccines. The Company has products for various segments, which include pain management, diabetes management, organ transplantation, pediatric vaccines.

2. Basis of Preparation

The financial statements have been prepared to comply in accordance with generally accepted accounting in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notifed under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956 read with General Circular 8/2004 dated April 04, 2014 issued by the Ministry of Corporate Afairs. The financial statements have been prepared on a going concern basis under the historical cost convention on an accrual basis except in case of assets for which revaluation is carried out.

The accounting policies adopted in the preparation of financial statement are consistent with those of previous year except for the change in accounting policy explained below.

3 i) Contingent Liabilities (to the extent not provided for) (Rs. in million)

Particulars As at As at March 31 , 2014 March 31 , 2013

Disputed demands/ show-cause notices under:- a) Income tax cases (refer note (a) below) 167.0 167.0

b) Customs duty cases (refer note (b) below) 4.0 4.0

c) Central excise duty cases (refer note (c) below) 6.6 6.6

d) Service tax (refer note (d) below) 72.6 9.9

Total 250.2 187.5

Bank Guarantee 99.8 98.9 Labour cases (in view of large number of cases, it is impracticable to disclose each of them) 1.5 1.5

Notes:

a) Includes income tax demand of Rs.162.2 million in respect to AY 2005-06. Income tax department raised demand based on certain grounds related with purchases made by the Company from an overseas party. The demand of Rs.162.2 million has been set of by the tax authorities from the refund due to the Company from the department pertaining to various years. The matters related to income tax demand are still pending with tax/judicial authorities. Company believes that it has merit in these cases, hence no provision is required.

b) In respect of custom duty demand, the Assessing Officer levied custom duty on certain exempted items imported by the Company. Company has deposited the entire amount of demand under protest and the matter is pending before Hon''ble Customs, Excise and Service Tax Appellate Tribunal. Company believes that it has merit in its case, hence no provision is required.

c) In respect of central excise duty demand, the Assessing Officer levied excise duty on common inputs used in manufacture of exempted and taxable products. Company has deposited the entire amount of demand under protest and the matter is pending before the Hon''ble Customs, Excise and Service Tax Appellate Tribunal. Company believes that it has merit in its case, hence no provision is required.

d) In respect of service tax demand, the Assessing Officer levied service tax on foreign services rendered & delivered outside India by the Company & certain others services on which there was no liability to pay service tax. Company believes that it has merit in its case, hence no provision is required.

ii) During the financial year 2011-12, a search operation was conducted by Income tax department under section 132 of the Income Tax Act, 1961. During the search operation, certain explanations were demanded and some documents were seized by the tax authorities. Further, the Company provided details as and when required by the Income tax authorities and the Company has not received any demand order related to search operation. Also, in connection with the search operation, the Company received notices under section 153A which required the Company to fle income tax returns for six assessments years i.e. from AY 2006-07 to 2011-12. Liability if any, cannot be quantifed at this stage of the proceedings. The management believes that the transactions of the Company are fully compliant with relevant provisions of the Income Tax Act, 1961 and hence, no provision is required.

iii) The Company had manufactured and ofered supply of certain vaccines which were manufactured against the confirmed order received from the Ministry of Health and Family Welfare (MOH&FW). Some quantities of vaccines were supplied during December 2011, the balance could not be supplied in view of disputes with respect to delivery dates and in the meantime the stock of such vaccines amounting to Rs.74.1 million got expired. Further, the Company had also received advance market commitment (AMC) amounting to Rs.100 million against these vaccines. The refund of the advance so received (after adjusting the amount receivable against the vaccines already supplied) has been demanded back by MOH&FW along with interest on account of non-supply of balance quantities of vaccines. In view of above disputes, the Company obtained a stay order from the Hon''ble Delhi High Court against recovery of said amount, till the disputes are finally resolved through arbitration. While the arbitral proceedings are on, the Company believes that the entire amount in respect of above supplies (after adjusting the AMC amount) including the amount of expired stock and applicable interest thereon is recoverable and no interest is payable on the said AMC amount. Based on legal opinion, no adjustment in respect of the expired stock and the interest amount has been made in the financials.

b) Other commitments :

i) Export commitments of Rs. 2,332.2 million (Previous year Rs. 2,778.7 million) under advance licenses Schemes.

ii) The Company has received financial assistance in the form of soft loan under various projects from Government authorities. As per the terms of related agreements, Company is also required to incur expenditure in form of Company''s contribution to the relevant project. Further, the Company has to repay these loans as per terms of respective agreement. The amount of commitment is not quantifable.

iii) The Company has entered into an agreement with other shareholders of its subsidiary company, namely NewRise Healthcare Private Limited (formerly Umkal Medical Institute Private Limited) to acquire the remaining stake in the subsidiary company. The Company has already purchased part of these shares during the current year at an aggregate value of Rs.11.4 million. As per the terms of the agreement, the Company is required to pay further amount of Rs.93.6 million towards purchase of balance shares in 2014-15 and post such purchase of shares, the subsidiary company will become a wholly owned subsidiary company of the Company.

iv) For commitments relating to lease arrangements, refer note 36.

4. Related Party Disclosures

A. Names of related parties and related party relationships i) Related parties where control exists

Subsidiaries

- Radhika Heights Ltd. ("RHL") (formerly Best On Health Ltd. (Wholly-owned subsidiary (WOS))

- Radicura Infra Ltd. (formerly Radicura &Co. Ltd. (Indirect WOS (IWOS) through RHL),

- Nirmala Buildwell Pvt. Ltd. (formerly Panacea Hospitality Services Pvt. Ltd. (IWOS through RHL)

- Cabana Construction Pvt. Ltd. (formerly Panacea Educational Institute Pvt. Ltd. (IWOS through RHL)

- Sunanda Infra Ltd. (formerly Sunanda Steel Company Ltd. (IWOS through RHL)

- Nirmala Organic Farms & Resorts Pvt. Ltd. (IWOS through RHL)

- Cabana Structures Ltd. (formerly Best On Health Foods Ltd. (IWOS through RHL)

- Rees Investments Ltd. ("Rees") (Guernsey): (WOS)

- Kelisia Holdings Ltd. ("KHL") (Cyprus) (IWOS through Rees)

- Kelisia Investment Holding AG ("KIH") (Switzerland) (IWOS through KHL) (under liquidation)

- Panacea Biotec (International) SA ("PBS") (Switzerland) (WOS)

- Panacea Biotec Germany GmbH (Germany) (Indirect WOS through PBS)

- Panacea Biotec GmbH (Germany) (WOS) (under liquidation)

- Panacea Biotec FZE, (UAE) (WOS) (liquidated on June 18,2013)

- NewRise Healthcare Pvt. Ltd. (Formerly Umkal Medical Institute Pvt. Ltd.: (Subsidiary)

- Lakshmi & Manager Holdings Ltd. ("LMH") WOS*

- Trinidhi Finance Pvt. Ltd. ("Trinidhi") (IWOS through LMH)*

- Best General Insurance Company Ltd. ("Best General") (indirect subsidiary through LMH))*

*The shares held in LMH have been sold to related parties during the year and LMH and its subsidiaries (Trinidhi and Best General) cease to be Company''s subsidiary company w.e.f. 25.1.2014.

ii) Other related parties with whom transactions has taken place during the year

a) Joint Ventures

- Chiron Panacea Vaccines Pvt. Ltd. (under liquidation) (Refer note 37(e)

- Adveta Power Pvt. Ltd.,

b) Associates - PanEra Biotec Pvt. Ltd.

c) Key Management - Mr. Soshil Kumar Jain - Chairman and Whole-time Director Personnel - Mr. Ravinder Jain - Managing Director

- Dr. Rajesh Jain - Joint Managing Director

- Mr. Sandeep Jain - Joint Managing Director

- Mr. SumitJain - Whole-time Director

(d) Relatives of Key Management personnel having transactions with the Company: Mr. Ashwani Jain, Son-in-law of Mr. Soshil Kumar Jain Mr. Shagun Jain, Son-in-law of Mr. Ravinder Jain Mrs. Radhika Jain, Daughter of Mr. Ravinder Jain Mrs. Shilpy Jain, Wife of Mr. Sumit Jain Mr. Ankesh Jain, Son of Dr. Rajesh Jain

(e) Enterprises over which person(s) having control or significant infuence over the Company / Key management personnel(s), along with their relatives, are able to exercise significant infuence:

- Neophar Alipro Ltd.

- First Lucre Partnership Co.*

- LMH, Trinidhi and Best General with efect from 25.01.2014 *This enterprise is also holding shares in the Company.

5. Segment Information

The primary segment reporting format is determined to be business segments as the company''s risk and rates of return are afected predominantly by diferences in the products and services produced and sold. Secondary information is reported geographically. The operating businesses are organized and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that ofers diferent products and serves diferent markets.

Business Segments :

The Company is engaged in the business of research, development, manufacture and marketing of Vaccines and Branded Pharmaceutical Formulations. The Company has products for various segments, which include pediatric vaccines, pain management, diabetes management and organ transplantation.

d) Contingent liabilities (to the extent not provided for) - Nil (Previous year Nil).

e) The Company had entered into "Dissolution of Joint Venture Agreement" dated November 30, 2012 w.r.t. its Joint Venture Chiron Panacea Vaccines Pvt. Ltd. in the previous year, whereby the Joint Venture partners have desired and mutually agreed to an early termination of the Joint Venture Agreement. As per the dissolution agreement, the joint venture between both the partners has been terminated w.e.f. January 31, 2013. The liquidation proceedings of the Joint Venture Company have already commenced and are in progress as on March 31, 2014.

However, as per the agreement both Joint Venture partners will exercise equal control over the management till the final liquidation of Joint Venture. Therefore as per the provisions of Accounting Standard – 27, the Joint Venture Company has been considered as jointly controlled entity for the purpose of preparation of financial statements.

6. The Company has a Defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rs.1.0 million (except in case of Managing/ Joint Managing/ Whole time Directors). The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarize the components of net benefit expense recognized in the statement of Profit and loss and the funded status and amounts recognized in the balance sheet for the respective plans.

7. The Company has paid managerial remuneration of Rs.37.5 million during the current year. The amount paid as managerial remuneration has exceeded the limits prescribed under Section 198 and 309 read with Part II of Schedule XIII to the Companies, Act, 1956 by Rs.13.5 million due to unexpected losses during the current year. Also, during the previous year the Company paid managerial remuneration of Rs.37.2 million which exceeded the limits prescribed in aforesaid provisions of the Companies Act by Rs.13.2 million. During the year, the Company has fled applications to obtain approvals from Central Government in respect to excess remuneration paid for current and previous year. Pending outcome of the application fled with the Central Government, no adjustments have been made in the financial statements.

8. During the quarter ended September 30, 2011, World Health Organization (WHO) had delisted Company''s DTP-based combination vaccines from its list of pre-qualified vaccines. The company made substantive eforts since September 2011 and has revamped the whole Quality Management System at its Lalru and Baddi sites enabling it to get pre-qualified by WHO once again. During the month of February/March, 2013, representatives from WHO and UNICEF visited the Company''s vaccine facilities at Lalru (Punjab) and Baddi (H.P.) with the objective of re-evaluation of the acceptability in principle of Pentavalent Vaccine (DTP-Hep B-Hib) produced by Panacea Biotec for purchase by United Nations Agencies. World Health Organization (WHO) has completed the evaluation process of pre-qualification (PQ) of Pentavalent Vaccine (Easyfive-TT) and has pre-qualified company''s vaccine product in the month of October in current year. The Company has also received UNICEF Award for supply of DTP-HepB-Hib (Pentavalent) Vaccine (Easyfive-TT) to UNICEF for the period 2014-2016. The supplies for the same have already commenced.

9. The Company has incurred losses of Rs.4.2 million (Previous year Rs.2,301.3 million) (including exceptional income of Rs.2,970.2 million (Previous year Rs.173.1 million)) during the year ended March 31, 2014 and as of that date, the Company has net current liabilities of Rs.5,410.1 million (Previous year Rs.1,810.9 million). Further, the Company''s accumulated losses have resulted in erosion of more than fifty percent of its peak net worth calculated as per the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The fact of such erosion and measures initiated to improve financial condition has been reported to the Board for Industrial and Financial Restructuring ("BIFR") within the stipulated period. Further, the continuous losses also have adversely afected the cash flows of the Company. The Company has undertaken certain measures to mitigate the risk of going concern which includes supply to UNICEF/other customers of pentavalent vaccine, certain strategic alliances with foreign collaborators for supply of vaccines and pharma products and launching its frst product Tacrolimus in USA in December 2012 and fling of ANDAs with USFDA. Further, the Company has also submitted a proposal for the comprehensive debt restructuring with Corporate Debt Restructuring (CDR) Cell which has been admitted by CDR Cell and the financial package is being finalized by the Monitoring Institution, viz. State Bank of India. The management is confdent that with the above measures and continuous eforts to improve the business, it would be able to generate sustainable cash fow, discharge its short-term and long term liabilities and recover & recoup the erosion in its net worth through Profitable operations and continue as a going concern. Accordingly, these financial statements have been prepared on a going concern basis and do not include any adjustments relating to the recoverability and classification of recorded assets, or to amounts and classification of liabilities that may be necessary if the entity is unable to continue as a going concern. 48. The Company has fled its proposal for Comprehensive Debt Restructuring with Corporate Debt Restructuring (CDR) Cell on 21.12.2013. The proposal has been admitted by CDR cell for further processing in its meeting held on 24.1.2014. State Bank of India (SBI) has been appointed as the Monitoring Institute (MI) to prepare a financial package under the CDR scheme. SBI is in the process of finalizing the draft package for its financial restructuring and shall submit the same with CDR cell in due course. The management is confdent that Comprehensive Debt Restructuring proposal would get approved in due course.

10. On account of continuous losses as explained in the note 47 above, the cash flows of the Company have been adversely afected which has resulted into certain delays and defaults in repayment of loan installments, interests on long term and short term borrowings and overdrawing of cash credit facilities availed from banks during the year. The following tables summarize the details of amount and period of defaults in each case.

11. During the previous year, the Company exercised the option as per the Companies (Accounting Standards) (Second Amendment) Rules, 2011. As per the option, exchange diferences related to long term foreign currency monetary items so far as they relate to the acquisition of depreciable capital assets are capitalized or de-capitalized from cost of assets and depreciated over the useful life of the assets. In other cases, such exchange diferences are accumulated in a "Foreign currency monetary item translation diference account" and amortized over the balance period of such long term assets/liabilities. Accordingly, exchange diferences of Rs.Nil (previous year Rs.312.8 million) have been capitalized during the year and unamortized balance of "Foreign currency monetary item translation diference account" of Rs.196.8 million (Previous year Rs.102.4 million) as on March 31, 2014 is included under the head "Reserve & surplus".

12. As at March 31, 2014, an amount of Rs.630.1 million (previous year Rs.694.7 million) including interest of Rs.94.6 (previous year Nil) is receivable from its wholly owned subsidiary viz. Rees Investments Ltd. Pursuant to the accumulated losses in Rees & its other subsidiaries, Company assessed that the loan repayment capability of Rees Investment Ltd. has been adversely afected. Accordingly, the amount of Rs.630.1 million (Previous year Rs.536.2 million) has been provided for as ''Provision for bad and doubtful advances''.

13. The Company received a capital subsidy of Rs.Nil (Previous year Rs.3.0 million) under the Central Investment Subsidy Scheme, 2003 based on investment in plant and machinery as it manufacturing unit at Baddi, in the state of Himachal Pradesh which is in the nature of promoters'' contribution. This has been treated as a capital reserve in book of accounts.

14. The Company had given an advance of Rs.176.8 million (3.4 million USD) in financial year 2007-08 pursuant to the agreements for acquiring certain properties from M/s Ilyas & Mustafa Galadari Management Investment & Development L.L.C., U.A.E. (Ilyas). As per the agreements entered into with them, the properties were expected to be handed over in financial year 2008-09. However, due to inordinate delays in completion of project, properties could not be delivered to the Company in time. After extensive discussions and negotiations, the Company has entered into new agreements with them, as per which the Company will get 1 commercial unit and 8 residential units (having combined area more than that of properties agreed earlier) for a consideration equivalent to the advance given earlier. The possession of new properties is expected in 2015. The Company believes that the market value of the properties is more than the advance given under the earlier agreements, therefore, no adjustment is required to be provided for in respect of the advance.

15. The Company avails CENVAT credit on input and input services used as per the provision of the relevant applicable laws. Balance with excise, custom etc. amounting to Rs.81.8 million under the head Loans & Advances, includes an amount of Rs.33.7 million which relates to accumulated amount of CENVAT Credit availed by the company on input services utilized by it. With the current level of excisable manufacturing activities, the Company utilizes lesser amount of CENVAT credit as compared to the amount so accumulated every year of CENVAT credit on such input services. However, as per the provisions of service tax laws, there is no time limit on utilization of CENVAT Credit availed. Therefore, based on future business plans, the Company is confdent that it will be able to fully utilize the accumulated amount of CENVAT Credit so availed by distributing it to its manufacturing units and utilizing it in subsequent years.

16. The assets of Rs.352.5 million (Previous year Rs.352.5 million) recognized by the Company as ''MAT Credit Entitlement'' under the head ''Loans and advances'' represents that portion of MAT liability, which can be recovered and set of in subsequent years based on provisions of Section 115JAA of the Income Tax Act, 1961. The management, based on the future Profitability projections and other factors disclosed under note 47 and 48, is of the view that there would be sufcient taxable income in foreseeable future, which will enable the Company to utilize MAT credit assets as per the relevant provisions of the Income Tax Act, 1961. The management is confdent that no losses are expected in this regard and accordingly no adjustment is required in the financial statements.

17. a) In terms of the Accounting Standard -16 "Borrowing Costs", the foreign exchange diferences arising from foreign currency borrowings to the extent regarded as an adjustment to interest cost were treated as borrowing cost in earlier years. However, in the previous year in pursuance of the clarifcation issued by Ministry of Corporate Afairs vide its circular no. 25/2012 dated August 9, 2012, the Company changed its accounting policy w.e.f. April 1, 2011 and accounted for the aforesaid foreign exchange diferences arising from foreign currency borrowings as per AS-11 - "The Efects of Changes in Foreign Exchange Rates". Consequent to the above, exchange diference of Rs.Nil (Previous year Rs.173.1 million), which was earlier recognized as borrowing cost pertaining to the financial year 2011-12, was reversed and shown as an exceptional item.

b) In earlier years, the Company had subscribed to 7,211,666 0.5% Optionally Convertible Non-Cumulative Redeemable Preference Shares of Re.1 each at a premium of Rs.299 per share in Radhika Heights Limited (formerly Best on Health Limited). During the current year, as per the terms of the agreement, the Company exercised its right of conversion of preference shares into equity shares and accordingly, 2,874,159 equity shares of Re.1 each at a premium of Rs.1,169 per share have been allotted to the Company aggregating to Rs.3,362.8 million equivalent to the redemption value of preference shares as on date of such allotment of equity shares (including redemption premium of Rs.1,199.3 million). The aforesaid premium on redemption of preference shares has been shown as exceptional item in the statement of Profit and loss. Post such allotment of equity shares in the current year, the Company holds 4,776,319 equity shares of Re.1 each in Radhika Heights Limited (formerly Best on Health Limited) as on March 31, 2014 and the value of total investment stands at Rs.3,385.6 million.

18. 0.0 under "Rs. in million" represents amount less than Rs.50,000 and 0.0 under units represents units less than 50,000.

19. Previous year figures have been regrouped / reclassified, where necessary, to conform to this year''s classification.


Mar 31, 2013

1. Corporate information

Panacea Biotec Limited ("the Company”) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on stock exchange in India. The Company is one of the India''s leading research based health management companies engaged in the business of research, development, manufacture and marketing of branded Pharmaceutical Formulations and Vaccines. The Company has products for various segments, which include pain management, diabetes management, organ transplantation, pediatric vaccines.

2. Basis of Preparation

The fnancial statements have been prepared to comply in accordance with generally accepted accounting in India (Indian GAAP). The company has prepared these fnancial statements to comply in all material respects with the accounting standards notifed under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The fnancial statements have been prepared on a going concern basis under the historical cost convention on an accrual basis except in case of assets for which revaluation is carried out (also refer note 47).

The accounting policies adopted in the preparation of fnancial statement are consistent with those of previous year.

3 i) Contingent Liabilities (to the extent not provided for)

(Rs. in million) Particulars As at As at March 31, 2013 March 31, 2012

Disputed demands/ show-cause notices under:-

a) Income tax cases (refer note (a) below) 167.0 4.8

b) Customs duty cases (refer note (b) below) 4.0 4.0

c) Central excise duty cases (refer note (c) below) 6.6 6.6

d) Service tax (refer note (d) below) 9.9 9.7

Total 187.5 25.1

Bank Guarantee 98.9 159.9 Labour cases (in view of large number of cases, it is impracticable to disclose each of them) 1.5 1.2

Notes:

a) Includes income tax demand of Rs.162.2 million in respect to AY 2005-06. Income tax department raised demand based on certain grounds related with purchases made by the Company from an overseas party. The matters related to income tax demand are pending with tax/judicial authorities. Company believes that it has merit in these cases, hence no provision is required.

b) In respect of custom duty demand, the Assessing Ofcer levied custom duty on certain exempted items imported by the Company. Company has deposited the entire amount of demand under protest and the matter is pending before Hon''ble Customs, Excise and Service Tax Appellate Tribunal. Company believes that it has merit in its case, hence no provision is required.

c) In respect of central excise duty demand, the Assessing Ofcer levied excise duty on common inputs used in manufacture of exempted and taxable products. Company has deposited the entire amount of demand under protest and the matter is pending before the Hon''ble Customs, Excise and Service Tax Appellate Tribunal. Company believes that it has merit in its case, hence no provision is required.

d) In respect of service tax demand, the Assessing Ofcer levied service tax on foreign services rendered & delivered outside India by the Company & certain others services on which there was no liability to pay service tax. Company believes that it has merit in its case, hence no provision is required.

ii) During the previous year, a search operation was conducted by Income tax department under section 132 of the Income Tax Act, 1961. During the search operation, certain explanations were demanded and few documents were seized by the tax authorities. Further, the Company provided details as and when required by the tax authorities and the Company has not received any demand order related to search operation. In connection with the search operation, subsequent to the year end, the Company received notices under section 153A which require Company to fle income tax return for six assessments years i.e. from AY 2006-07 to 2011-12. Liability if any, cannot be quantifed at this stage of the proceedings. The management believes that the transactions of the Company are fully compliant with relevant provisions of the Income Tax Act, 1961.

iii) The Company had manufactured and ofered supply of certain vaccines manufactured against confrmed order. Some quantities of vaccines were supplied during December 2011, the balance could not be supplied in view of disputes with respect to delivery dates and in the meantime the stock of such vaccines has expired. Further, the Company has also received advance market commitment (AMC) amount against these vaccines. In view of above disputes, the Company has obtained a stay order from the Hon''ble Delhi High Court against recovery of said amount, till the disputes are fnally resolved through arbitration. While the arbitral proceedings are on, the Company believes that the entire amount in respect of above supplies (after adjusting the AMC amount) and applicable interest thereon is recoverable and no interest is payable on the said AMC amount. Based on legal opinion, no adjustment in respect of the expired stock and the interest amount has been made in the fnancials. Liability if any, cannot be quantifed at this point of time.

4. Capital & other commitments

a) Estimated amount of contracts remaining to be executed on capital account, net of advances and not provided in the books are as follows:

b) Other commitments :

i) Uncalled liability of Rs.Nil (Previous year Rs.33.8 million) on partly paid shares of a subsidiary company, NewRise Healthcare Pvt. Ltd. (Formerly known as Umkal Medical Institute Pvt. Ltd.) (Refer Note : 12 Non current investments).

ii) Export commitments of Rs.2,778.7 million (Previous year Rs.2,617.9 million) under advance licenses Schemes.

iii) The Company has received fnancial assistance in the form of soft loan under various projects from Government authorities. As per the terms of related agreements, Company is also required to incur expenditure in form of Company''s contribution to the relevant project. Further, the Company has to repay these loans as per terms of respective agreement. The amount of commitment is not quantifable.

iv) For commitments relating to lease arrangements, refer note 36.

5. Related Party Disclosures

A. Names of related parties and related party relationships i) Related parties where control exists

Subsidiaries - Best On Health Ltd. ("BOH”) (Wholly-owned subsidiary (WOS))

- Radicura & Co. Ltd. (Indirect WOS through BOH)

- Panacea Hospitality Services Pvt. Ltd. (Indirect WOS through BOH)

- Panacea Educational Institute Pvt. Ltd. (Indirect WOS through BOH)

- Sunanda Steel Company Ltd. (Indirect WOS through BOH)

- Nirmala Organic Farms & Resorts Pvt. Ltd (Indirect WOS through BOH)

- Best On Health Foods Ltd. (Indirect WOS through BOH)

- Rees Investments Ltd. ("Rees”) (Guernsey): (WOS)

- Kelisia Holdings Ltd. ("KHL”) (Cyprus) (Indirect WOS through Rees)

- Kelisia Investment Holding AG ("KIH”) (Switzerland) (Indirect WOS through KHL)

- Panacea Biotec (International) SA("PBS”) (Switzerland) (WOS w.e.f. April 1,2012) (indirect WOS through KIH prior to becoming WOS)

- Panacea Biotec Germany GmbH (Germany) (Indirect WOS through PBS)

- Panacea Biotec (Europe) AG, (Switzerland) (Indirect WOS through PBS) (liquidated on December 15,2011)

- Panacea Biotec GmbH (Germany) (WOS)

- Panacea Biotec FZE, (UAE) (WOS)

- Panacea Biotec, Inc. (USA) (WOS) (liquidated on March 30,2011)

- NewRise Healthcare Pvt. Ltd. (Formerly known as Umkal Medical Institute Pvt. Ltd.: (Subsidiary)

- Lakshmi & Manager Holdings Ltd. ("LMH”) WOS w.e.f. November 24,2011* *Associate Company prior to becoming WOS.

- Trinidhi Finance Pvt. Ltd. (Indirect WOS through LMH) w.e.f. November 24,2011**

** Subsidiary of LMH w.e.f. 6th August, 2011 and became WOS of LMH on October 7, 2011

- Best General Insurance Company Ltd (indirect subsidiary through LMH) w.e.f. November 24,2011

ii) Related parties with whom transactions has taken place during the year

a) Joint Ventures - Chiron Panacea Vaccines Pvt. Ltd. (Refer note 37 e)

- Adveta Power Pvt. Ltd., w.e.f. July 4,2011

b) Associates - PanEra Biotec Pvt. Ltd.

c) Key Management - Mr. Soshil Kumar Jain - Chairman and Whole-time Director Personnel - Mr. Ravinder Jain - Managing Director

- Dr. Rajesh Jain - Joint Managing Director

- Mr. Sandeep Jain - Joint Managing Director

- Mr. SumitJain - Whole-time Director

(d) Relatives of Key Management personnel having transactions with the Company: Mr. Ashwani Jain, Son-in-law of Mr. Soshil Kumar Jain

Mr. Shagun Jain, Son-in-law of Mr. Ravinder Jain Mrs. Radhika Jain, Daughter of Mr. Ravinder Jain Mrs. Shilpy Jain, Wife of Mr. Sumit Jain Mr. Ankesh Jain, Son of Dr. Rajesh Jain

(e) Enterprises over which person(s) having control or signifcant infuence over the Company / Key management personnel(s), along with their relatives, are able to exercise signifcant infuence:

- Neophar Alipro Ltd.

- First Lucre Partnership Co.*

*Holding Shares in the Company.

6. Segment Information

The primary segment reporting format is determined to be business segments as the company''s risks and rates of return are afected predominantly by diferences in the products and services produced and sold. Secondary information is reported geographically. The operating businesses are organized and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that ofers diferent products and serves diferent markets.

Business Segments :

The Company is engaged in the business of research, development, manufacture and marketing of Vaccines and Branded Pharmaceutical Formulations. The Company has products for various segments, which include pediatric vaccines, pain management, diabetes management and organ transplantation.

7. The Company has a defned beneft gratuity plan. Every employee who has completed fve years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rs.1.0 million (except in case of Managing/ Joint Managing/ Whole time Directors). The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarize the components of net beneft expense recognized in the statement of proft and loss and the funded status and amounts recognized in the balance sheet for the respective plans.

8. The Company has paid managerial remuneration of Rs.37.2 million during the year. The amount paid as managerial remuneration has exceeded the limits prescribed under Section 198 and 309 read with Part II of Schedule XIII to the Companies, Act, 1956 by Rs.13.2 million due to unexpected losses during the current year. The Company has initiated steps to obtain approval from Central Government for the excess remuneration paid.

9. During the year 2011-12, following a routine site audit, World Health Origination (WHO) delisted the Company''s DTP-based combination and monovalent hepatitis B vaccines from its list of pre-qualifed vaccines on account of defciencies in quality management system. However, the issue was not about the quality, safety or efcacy of the products. Since then, the Company has taken several corrective and preventive measures to ensure compliance with the WHO pre- qualifcation guidelines.

During the year, the auditors from WHO and UNICEF visited the vaccine facilities at Lalru (Punjab) and Baddi (H.P.) in Feb-Mar 2013 with the objective of re-evaluation of the acceptability in principle of combination vaccine (DTP-Hep B-Hib) produced by Panacea Biotec for purchase by United Nations Agencies. There were no critical observations and the Audit Team acknowledged the continuing improvements that have been made in this regard. No critical factors were observed during the course of the audit that would indicate that the combination vaccine produced by the Company would have an unacceptable level of potency, purity, safety and efcacy. In general, the production, quality control, quality assurance and QMS functions relevant to combination vaccine were observed to be in conformity to applicable WHO recommendations. For the above vaccine, the Company has a stock of Rs.324.6 million and Rs.394.2 million of raw & packing material and fnished goods, respectively as at March 31, 2013. Fixed assets relating to above products cannot be quantifed separately. The Company is confdent that with the post audit activities, it will be able to get re-listing of combination vaccine in the list of WHO pre-qualifed vaccines in due course and believes that these stocks would be liquidated in alternate domestic and overseas markets. Pending outcome of above measures, no adjustment has been made to the fnancial statements.

During the year, the Company has incurred net losses of Rs.2,301.3 million mainly because of delisting of its vaccine products from list of pre-qualifed vaccines. However, the Company''s cash fow projections show that credit facilities from banks and internal accruals would be sufcient to meet the working capital and other liquidity requirements associated with the existing operations.

10. During the previous year, the Company exercised the option as per the Companies (Accounting Standards) (Second Amendment) Rules, 2011. As per the option exchange diferences related to long term foreign currency monetary items so far as they relate to the acquisition of depreciable capital assets are capitalized or de- capitalized from cost of assets and depreciated over the useful life of the assets. In other cases, such exchange diferences are accumulated in a "Foreign currency monetary item translation diference account” and amortized over the balance period of such long term assets/ liabilities. Accordingly, exchange diferences of Rs.312.8 million (previous year Rs.245.3 million) have been capitalized during the year and unamortized balance of "Foreign currency monetary item translation diference account” of Rs.(102.4) million (previous year Rs.20.5 million) as on March 31, 2013 is included under the head "Reserve & surplus”. 49. Information in respect of Section 293A (4) of the Companies Act, 1956 pertaining to donations paid of political parties:

11. As at March 31, 2013, an amount of Rs.694.7 million (previous year Rs.654.3 million) including interest of Nil (previous year Rs.36.2 million) is receivable from its wholly owned subsidiary viz. Rees Investment Ltd. Pursuant to the diminution in the value of investment in US based listed company ‘PharmAthene Inc.'' by Rees through its subsidiary and losses in Rees & its other subsidiaries, Company assessed that the loan repayment capability of Rees Investment Ltd. has been adversely afected. Accordingly, amount of Rs.536.2 million (Previous year Rs.421.4 million) has been provided for as ‘Provision for bad and doubtful advances''.

12. In the current year, the Company received a capital subsidy of Rs.3.0 million under the Central Investment Subsidy Scheme, 2003 based on investment in plant and machinery as it manufacturing unit at Baddi, in the state of Himanchal Pradesh which is in nature of promoters'' contribution. This has been treated as capital reserve in book of accounts.

13. The assets of Rs.352.5 million (Previous year Rs.352.5 million) recognized by the Company as ‘MAT Credit Entitlement Account'' under ‘ Loans and advances'' represents that portion of MAT liability, which can be recovered and set of in subsequent years based on provisions of Section 115JAA of the Income Tax Act, 1961. The management, based on present trend of proftability and also the future proftability projections, is of the view that there would be sufcient taxable income in foreseeable future, which will enable the Company to utilize MAT credit assets. The management is confdent that no losses are expected in this regard.

14. 0.0 under "Rs. in million” represents amount less than Rs.50,000 and 0.0 under units represents units less than 50,000.

15. Previous year fgures have been regrouped / reclassifed, where necessary, to conform to this year''s classifcation.


Mar 31, 2012

1. Corporate information

Panacea Biotec Limited ('the Company') is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on stock exchanges in India. The Company is one of the India's leading research based health management companies engaged in the business of research, development, manufacture and marketing of branded Pharmaceutical Formulations and Vaccines. The Company has products for various segments, which include pain management, diabetes management, organ transplantation, pediatric vaccines etc.

2. Basis of Preparation

The financial statements have been prepared to comply in accordance with generally accepted accounting in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on a going concern basis under the historical cost convention on an accrual basis except in case of assets for which revaluation is carried out (also refer note 46). The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year except for the change in accounting policy. The significant accounting policies are as follows:

Notes :

a) Foreign currency term loan from State Bank of India (loan - I) carries interest @ 6 months LIBOR plus 7.5%. The loan is repayable in three installments (i.e. 20% in September 2011, 30% in September 2012 & 50% in September 2013).

b) Foreign currency term loan from State Bank of India (loan - II) carries interest @ 6 months LIBOR plus 5.75%. The loan is repayable in four equal quarterly installments of Rs.17.5 million starting from June 2013 to March 2014.

c) Foreign currency term loan from State Bank of Travancore carries interest @ 6 months LIBOR plus 7.5%. The loan is repayable in three installments (i.e. 20% in September 2011, 30% in September 2012 & 50% in September 2013).

d) Foreign currency term loan from Bank of India carries interest @ 6 months LIBOR plus 4.75%. The loan is repayable in three equal yearly installments commencing at the end of sixth year from the date of first drawdown (i.e. in financial year 2017-18).

e) Indian rupee term loan from State Bank of India carries interest @ SBAR. The loan is repayable in eight quarterly installments starting from June, 2011.

f) Above Foreign currency term loans taken from banks and Indian rupee term loan taken from State Bank of India are secured by way of first pari-passu charge by hypothecation of the Company's entire movable fixed assets, both present and future and mortgage of immovable properties of the Company being land admeasuring 96 bighas, 19 biswas & 93 bighas 12 biswas & 10 biswasi situated at village Samalheri, Tehsil Dera Bassi, District S.A.S. Nagar (Mohali), Punjab and land admeasuring 26 bighas, 3 biswas situated at Village Manpura, Tehsil Nalagarh, District Solan and land admeasuring 91 bighas, 1 biswas situated at Village Malpura, Tehsil Nalagarh, District Solan in the state of Himachal Pradesh and land admeasuring 9435.66 sq. yards situated at Indl. Plot No. E-4, PH-2, Indl. Area, S.A.S Nagar, (Mohali), Punjab. Foreign currency term loans from State Bank of India and Bank of India are also collaterally secured by personal guarantees of the promoter- directors of the Company, viz. Mr. Soshil Kumar Jain, Mr. Ravinder Jain, Dr. Rajesh Jain and Mr. Sandeep Jain.

g) Indian rupee loan from Indian Overseas Bank carries interest @ Base rate plus 1.5% . The loan is repayable in eight equal quarterly installments starting from January, 2014.

h) Term loan from Indian Overseas Bank is secured by way of first pari-passu charge by hypothecation of the company's entire movable fixed assets, both present and future and mortgage of immovable properties of the company being land admeasuring 96 bighas, 19 biswas & 93 bighas 12 biswas & 10 biswasi situated at village Samalheri, Tehsil Dera Bassi, District S.A.S. Nagar (Mohali), Punjab and land admeasuring 26 bighas, 3 biswas situated at Village Manpura, Tehsil Nalagarh, District Solan and land admeasuring 91 bighas, 1 biswas situated at Village Malpura, Tehsil Nalagarh, District Solan in the state of Himachal Pradesh and land admeasuring 9435.66 sq. yards situated at Indl Plot No. E-4, PH-2, Indl. Area, S.A.S Nagar, (Mohali), Punjab. It is also collaterally secured by personal guarantees of the promoter- directors of the Company, viz. Mr. Soshil Kumar Jain, Mr. Ravinder Jain, Dr. Rajesh Jain and Mr. Sandeep Jain.

i) Indian rupee term loans from Government of India through Department of Biotechnology are project specific loans which carry interest @ 2% p.a. These loans are repayable in ten equal half-yearly installments. The repayment of these loans would commence from one year after the completion of the respective projects.

j) Secured term loan from Government of India is secured by way of hypothecation of the company's all equipments, apparatus, machineries, spares, tools and other accessories, goods and/or other movable property present and future by way of first charge on pari-passu basis.

Note: Working capital loans, cash credits & Buyers' credits from banks are secured by way of first pari passu charge by hypothecation of all current assets and also by way of second pari-passu charge on all the movable fixed assets (including machinery and spares) of the Company and existing immovable properties of the Company being land admeasuring 96 bighas, 19 biswas & 93 bighas 12 biswas & 10 biswasi situated at village Samalheri, Tehsil Dera Bassi, District S.A.S. Nagar (Mohali), Punjab and land admeasuring 26 bighas, 3 biswas situated at Village Manpura, Tehsil Nalagarh, District Solan and land admeasuring 91 bighas, 1 biswas situated at Village Malpura, Tehsil Nalagarh, District Solan in the state of Himachal Pradesh and land admeasuring 9435.66 sq. yards situated at Indl. Plot No. E-4, PH-2, Indl. Area, S.A.S. Nagar, (Mohali ), Punjab. These are also collaterally secured by personal guarantees of the promoter- directors of the Company, viz. Mr. Soshil Kumar Jain, Mr. Ravinder Jain, Dr. Rajesh Jain and Mr. Sandeep Jain.

3 i) Contingent Liabilities (to the extent not provided for)

(Rs. in million)

S No Particulars As at As at March 31,2012 March 31,2011

I. Disputed demands/ show-cause notices under:-

a) Income Tax cases 4.8 1.8

b) Customs Duty cases 4.0 4.0

c) Central Excise Duty cases 6.6 6.6

d) Service Tax 9.7 8.3

Total 25.1 20.7

II. Bank Guarantee 159.9 117.5

III. Labour cases (in view of large number of cases, it is impracticable to disclose each of them) 1.2 1.2

Notes:

a) In respect of income tax demand, the Assessing Officer disallowed certain expenses in respect of A.Y. 2007-08, A.Y. 2008-09 and A.Y. 2009-10 which were computed in accordance with the provisions of Income Tax Act, 1961. The matters are pending with tax and judicial authorities. Company believes that it has merit in its case, hence no provision is required.

b) In respect of custom duty demand, the Assessing Officer levied custom duty on certain exempted items imported by the Company. Company has deposited the entire amount of demand under protest and the matter is pending before Hon'ble Customs, Excise and Service Tax Appellate Tribunal. Company believes that it has merit in its case, hence no provision is required.

c) In respect of central excise duty demand, the Assessing Officer levied excise duty on common inputs used in manufacture of exempted and taxable products. Company has deposited the entire amount of demand under protest and the matter is pending before the Hon'ble Customs, Excise and Service Tax Appellate Tribunal. Company believes that it has merit in its case, hence no provision is required.

d) In respect of service tax demand, the Assessing Officer levied service tax on foreign services rendered & delivered outside India by the Company & certain other services on which there was no liability to pay service tax. Company believes that it has merit in its case, hence no provision is required.

ii) During the year, a search operation was conducted by Income tax department under section 132 of the Income Tax Act, 1961. During the search operation, certain explanations were demanded and few documents were seized by the tax authorities. Further, the Company is in the process of providing details as and when required by the tax authorities and the Company has not received any demand order related to search operation. The management believes that the transactions of the Company are fully compliant with relevant provisions of the Income Tax Act, 1961. Hence, no provision is required for any tax liability.

iii) Company has received a notice during the year under section 148 of Income Tax Act, 1961 in relation to FY 2004-05. Income Tax Department has issued the notice based on certain grounds related with purchases made by the Company from an overseas party. The Company's view is that the grounds mentioned in the notice are not sustainable and are contrary to the real facts. Hence, Company has not provided any contingent liability corresponding to the notice.

iv) During the current year, the Company has received a demand notice from Department of Biotechonology [Ministry of Health]. In demand notice the department has mentioned the reason that terms of loan arrangement for a project has not been fulfilled by the Company, they have also levied additional interest @ 10% on loan amount , while as per agreement interest is payable @ 2%; the Company has contested the matter with concerned authorities. The Company believes it has complied with all terms and conditions related to this arrangement.

v) Maharashtra State Electricity Distribution Company Ltd. served a demand notice to the company on account of wrong tariff rates applied for the power consumption at research and development center, Navi Mumbai. Company is contesting the matter with electricity board. However, provision of Rs.10.0 million has been accounted for in the books of accounts in the current year on conservative basis.

b) Other commitments :

i) Uncalled liability of Rs.33.8 million (Previous year Rs.42.3 million) on partly paid shares of a subsidiary company, NewRise Healthcare Pvt. Ltd. (Formerly known as Umkal Medical Institute Pvt. Ltd.) (Refer Note : 10 Non current investments)

ii) Export commitments of Rs.2,617.9 million (Previous year Rs.2,033.0 million) under advance licenses and Duty Entitlement Pass Book Schemes.

iii) The Company has received financial assistance in the form of soft loan under various projects from Government authorities. As per the terms of related agreements, Company is also required to incur expenditure in form of company's contribution to the relevant project. Further, the Company has to repay these loans as per terms of respective agreement.

iv) For commitments relating to lease arrangements, refer note 34.

4. Foreign currency convertible bonds

"US$ 50 Million Zero Coupon Convertible Bonds due 2011" amounting to US$ 36.8 million were redeemed in previous financial year at a price equal to 142.8% of the outstanding principal amount on the maturity date (i.e. February 14, 2011). The premium on redemption of these bonds amounting to Rs.713.0 million and withholding tax thereon amounting to Rs.84.2 million were adjusted against the Securities premium account.

5. Related Party Disclosures

A. Names of Related Parties

Names of related parties where control exists irrespective of whether transactions have occurred or not

(a) Joint Ventures

- Chiron Panacea Vaccines Pvt. Ltd.,

- Cambridge Biostability Ltd. (liquidated on September 16, 2011)

- Adveta Power Pvt. Ltd., w.e.f. July 4, 2011

(b) Subsidiaries

- Best On Health Ltd. ("BOH") (Wholly-owned subsidiary (WOS))

- Radicura & Co. Ltd. (Indirect WOS through BOH),

- Panacea Hospitality Services Pvt. Ltd. (Indirect WOS through BOH)

- Panacea Educational Institute Pvt. Ltd. (Indirect WOS through BOH)

- Sunanda Steel Company Ltd. (Indirect WOS through BOH)

- Nirmala Organic Farms & Resorts Pvt. Ltd (Indirect WOS through BOH)

- Best On Health Foods Ltd. (Indirect WOS through BOH)

- Rees Investments Ltd. ("Rees") (Guernsey): (WOS)

- Kelisia Holdings Ltd. ("KHL") (Cyprus) (Indirect WOS through Rees)

- Kelisia Investment Holding AG ("KIH") (Switzerland) (Indirect WOS through KHL)

- Panacea Biotec (International) SA ("PBS") (Switzerland) (Indirect WOS through KIH)

- Panacea Biotec Germany GmbH (Germany) (Indirect WOS through PBS)

- Panacea Biotec GmbH (Germany) (WOS)

- Panacea Biotec (Europe) AG, (Switzerland) (Indirect WOS through PBS) (liquidated on December 15, 2011)

- Panacea Biotec FZE, (UAE) (WOS)

- Panacea Biotec, Inc. (USA) (WOS) (liquidated on March 30, 2011)

- NewRise Healthcare Pvt. Ltd. (Formerly known as Umkal Medical Institute Pvt. Ltd.: (Subsidiary)

- Lakshmi & Manager Holdings Ltd. ("LMH") WOS w.e.f. November 24, 2011*

-Associate Company prior to becoming WOS.

- Trinidhi Finance Pvt. Ltd. (Indirect WOS through LMH) w.e.f. November 24, 2011**

** Subsidiary of LMH w.e.f. 6th August, 2011 and became WOS of LMH on October 7, 2011

- Best General Insurance Company Ltd ( indirect subsidiary through LMH)) w.e.f. November 24, 2011

(c) Associates

- PanEra Biotec Pvt. Ltd.

(d) Key Management Personnel

- Mr. Soshil Kumar Jain - Chairman and Whole-time Director

- Mr. Ravinder Jain - Managing Director

- Dr. Rajesh Jain - Joint Managing Director

- Mr. Sandeep Jain - Joint Managing Director

- Mr. Sumit Jain - Whole-time Director

(f) Relatives of Key Management personnel having transactions with the Company:

Mr. Ashwani Jain, Son-in-law of Mr. Soshil Kumar Jain

Mr. Shagun Jain, Son-in-law of Mr. Ravinder Jain

Mrs. Radhika Jain, Daughter of Mr. Ravinder Jain

Mrs. Shilpy Jain, Wife of Mr. Sumit Jain

Mr. Ankesh Jain, Son of Dr. Rajesh Jain

(g) Enterprises over which person(s) having control or significant influence over the Company / Key management personnel(s), along with their relatives, are able to exercise significant influence:

- Neophar Alipro Ltd. - All India S.L. Jain Charitable Foundation - First Lucre Partnership Co.* - Second Lucre Partnership Co.*

- Radhika Associates - Sumit Nipun & Co. - Rattan Sons - Tahir & Co. - Soshil Kumar Jain (HUF)* - Ravinder Jain (HUF)*

- Rajesh Jain (HUF)* - Sandeep Jain (HUF)*.

6. Segment Information

The primary segment reporting format is determined to be business segments as the company's risks and rates of return are affected predominantly by differences in the products and services produced and sold. Secondary information is reported geographically. The operating businesses are organized and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

Business Segments:

The Company is one of the India's leading research based companies engaged in the business of research, development, manufacture and marketing of Vaccines and Branded Pharmaceutical Formulations. The Company has products for various segments, which include pediatric vaccines, pain management, diabetes management and organ transplantation.

c) The Company has common fixed assets for producing goods for domestic market and overseas markets. Hence, separate figures for segment assets / additions to segment assets cannot be furnished.

ii. For assets taken on Lease

a) The Company has taken various residential, office and godown premises under operating lease agreements. These are generally not non-cancelable and are renewable by mutual consent on mutually agreed terms. There is no sublease payments expected to be received under non-cancellable subleases at the balance sheet date and no restriction is imposed by lease arrangements.

b) Lease payments for the year are Rs.73.0 million (Previous year Rs.72.4 million).

d) During the financial year 2009-10, Company's erstwhile Joint Venture Cambridge Biostability Ltd. (CBL) had initiated steps to place it into creditors' voluntary liquidation. Due to the financial position of erstwhile Joint Venture company, the Company considered its investment, loan given and other receivables as doubtful for recovery. The necessary provisions in respect of recoverable balances were already provided for in books of accounts in earlier years. During the current year, CBL was dissolved and the Company received as amount of Rs.1.0 million as final settlement against its recoverable balances. Hence balances in respect of investment value, loan given and other receivables have accordingly been adjusted against their respective provisions made in earlier years.

e) Contingent liabilities (to the extent not provided for) - Nil (Previous year Nil).

7. The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rs.1.0 million (except in case of Managing/ Joint Managing/ Whole time Directors). The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarize the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the respective plans.

Statement of profit and loss

8. The Company has incurred expenditure on Pre-clinical development studies which are under progress amounting to Rs.68.9 million during the year and Rs.186.5 million as at March 31, 2012. This expenditure mainly relates to studies carried out by Clinical Research Organization (CRO) towards obtaining registration of Company's products outside and within India. The expenditure incurred has been carried in intangible assets under development. Management believes that it is in the nature of development expenditure and meets the capitalization criteria set out in Accounting Standard 26 on Intangible Assets notified by the Companies (Accounting Standards) Rules, 2006 (as amended) due to the following reasons:

- The expenditure is not towards basic research and therefore no new chemical entity comes into being. This expenditure primarily relates to the developmental work performed through external agencies (CROs). Safety profile of the basic molecule is well established in India and certain other countries. These products are being marketed successfully in such countries under different brand names.

- There is no experience to suggest that the studies conducted by CROs on behalf of the Company would lead to or make it difficult for the Company to obtain regulatory approvals in countries where the Company intends to market these products.

The management believes that these products would be commercially viable and there is no reason to believe that there is any uncertainty that may lead to not securing registration for the products from regulatory authorities of respective countries.

9. The Company has paid managerial remuneration of Rs.66.0 million during the year. The amount paid as managerial remuneration has exceeded the limits prescribed under Section 198 and 309 read with Part II of Schedule XIII to the Companies, Act, 1956 by Rs.42.0 million due to unexpected losses during the current year. The Company has initiated steps to obtain approval from Central Government for the excess remuneration paid.

10. During the year, following a routine site audit, World Health Origination (WHO) has delisted the Company's DTP-based combination and monovalent hepatitis B vaccines from its list of pre- qualified vaccines on account of deficiencies in quality management system. However, the issue is not about the quality, safety or efficiency of the products. The Company has initiated corrective and preventive measures to ensure compliance with the WHO pre- qualification guidelines and is in touch with WHO in this respect.

Further, in the light of series of changes made to the manufacturing facility at Okhla, New Delhi and WHO assessment during site audit, the Company has voluntarily withdrawn its oral polio vaccines (OPV) from WHO's list of prequalified vaccines as further corrective actions were required to be implemented. Again WHO has confirmed that OPV manufactured prior to site audit in September, 2011 and supplied through UN agencies can continue to be used as monitoring and testing of these lot confirm compliance quality specifications. As a part of continued commitment to Global Polio Eradication Initiative (GPEI), the Company is exploring various alternatives, including identification of alternate facilities and/or putting up a new facility at its existing plant at Baddi, Himachal Pradesh.

For the above products, Company has a stock of Rs.1,526.7 million and Rs.363.0 million of raw material and finished goods respectively as at March 31, 2012. Fixed assets relating to above products cannot be quantified separately. Company is confident that with these corrective & preventive measures, it will be able to get re-listing of above said vaccines in the list of WHO pre-qualified vaccines in due course and these stocks would be utilized/sold accordingly. Pending outcome of above measures, no adjustment has been made to the financial statements.

During the year, the Company has incurred net losses of Rs.2,077.9 million mainly because of delisting of its vaccine products from list of pre-qualified vaccines manufacturers. However, the Company's cash flow projections show that credit facilities from banks and internal accruals would be sufficient to meet the working capital and other liquidity requirements associated with the existing operations.

11. During the year, the Company has exercised the option as per the Companies (Accounting Standards) (Second Amendment) Rules, 2011. As per the option exchange differences related to long term foreign currency monetary items so far as they relate to the acquisition of depreciable capital assets are capitalized or de-capitalized from cost of assets and depreciated over the useful life of the assets. In other cases, such exchange differences can be accumulated in a "Foreign currency monetary item translation difference account" and amortized over the balance period of such long term assets/ liabilities. Accordingly, exchange differences of Rs.245.3 million have been capitalized during the year and unamortized balance of "Foreign currency monetary item translation difference account" is Rs.20.5 million as on March 31, 2012.

12. The Company has appointed independent consultants for conducting a Transfer pricing study to determine whether the transactions with associated enterprises were undertaken at "Arm's length basis" The Transfer Pricing Study under the Income Tax Act, 1961 in respect of transactions with the group companies for the current year is not yet complete and would be completed before the filing of tax return for the relevant assessment year. Adjustments, if any, arising out of the aforesaid will be recorded in the next year. The management confirms that all international transactions with associated enterprises are undertaken at negotiated contracted prices on usual commercial terms.

13. During the previous year, the Company carried out buy back of 5,592,000 equity shares of face value of Re.1 each at an average price of Rs.196.39 per share, from the open markets through Stock Exchanges. The Company accordingly transferred Rs.5.5 million to Capital redemption reserve from Securities premium account and also utilized an amount of Rs.1,092.8 million from Securities Premium Account towards the premium paid on the buyback of equity shares. Consequent to the buy back the proposed dividend and dividend distribution tax thereon pertaining to the financial year 2009-10 amounting to Rs. 1.1 million and Rs.0.2 million respectively were written back during the previous financial year.

The shares so bought back were considered to determine weighted average number of equity shares for the purpose of computing diluted EPS of the previous year.

14. In earlier years, the Company's erstwhile wholly owned subsidiary viz. Panacea Biotec Inc. and erstwhile joint venture viz. Cambridge Biostability Ltd. went into liquidation. Due to the financial position of both companies, the Company already considered its investment, loan given and other receivables as doubtful for recovery in earlier years and the necessary provisions in respect of recoverable balances were also provided for in the books of accounts. During the current year, the Company has received an amount of Rs.2.0 million as final settlement against its recoverable balances from these companies. Therefore, balances in respect of investment value, loan given and other receivables have accordingly been adjusted against their respective provisions made in earlier years.

15. As at March 31, 2012, an amount of Rs.654.3 million (previous year Rs.490.5 million) including interest of Rs.36.2 million (previous year Rs.6.1 million) is receivable from its wholly owned subsidiary viz. Rees Investment Ltd. During the current year, pursuant to the diminution in the value of investment in US based listed company 'PharmAthene Inc.' by Rees through its subsidiary and losses in Rees & its other subsidiaries, Company assessed that the loan repayment capability of Rees Investment Ltd. has come under pressure. Based on a conservative approach, an amount of Rs.421.4 million has been provided for as 'Provision for bad and doubtful advances'.

16. 0.0 under "Rs. in million" represents amount less than Rs. 50,000 and 0.0 under units represents units less than 50,000.

17. Till the year ended March 31, 2011, the Company was using pre- revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. The Company has reclassified previous year figures to conform to this year's classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of balance sheet.


Mar 31, 2011

A. Nature of Operations

Panacea Biotec Limited is one of the India's leading research based health management companies engaged in the business of research, development, manufacture and marketing of branded Pharmaceutical Formulations and Vaccines. The Company has products for various segments, which include pain management, diabetes management,organ transplantation and pediatric vaccines.

1. Contingent Liabilities (to the extent not provided for)

(Rs.in million)

S.No. Particulars As at As at

March 31,2011 March 31,2010

I. Disputed demands/ show-cause notices under:-

a) IncomeTaxcases 1.8 0.8

b) Customs Duty cases 4.0 4.0

c) Central Excise Duty cases 6.6 6.6

d) Service Tax 8.3 2.7

Total 20.7 14.1

II. Uncalled liability on partly paid shares of NewRise Healthcare Private Limited 42.3 115.6 (Formerly known as Umkal Medical Institute Pvt.Ltd.) (Refer Schedule VI - Investments)

III. Demand from Maharashtra State Electricity Distribution Company Limited (Refer note (e) below) I 8.1 8.1

IV. Labour cases (in view of large number of cases, it is impracticable to disclose each of them) 1.2 2.0

V. Premium on Redemption of'USS 50 Million Zero Coupon Convertible Bonds due 2011'(Refer - 565.0 note 3 below)

Notes:

a) In respect of Income Tax demand, the Assessing Officer disallowed certain expenses in respect of A. Y. 2007-08 and A.Y. 2008-09 which were computed in accordance with the provisions of IncomeTax Act, 1961. The matter is pending with Hon'ble IncomeTax Appellate Tribunal.The Company believes that it has merit in its case, hence no provision is required.

b) In respect of Custom Duty demand, the Assessing Officer levied Custom Duty on certain exempted items imported by the company. The Company has deposited the entire amount of demand under protest and the matter is pending before Hon'ble Customs, Excise and Service Tax Appellate Tribunal. The Company believes that it has merit in its case, hence no provision is required.

c) In respect of Central Excise Duty demand, the Assessing Officer levied Excise Duty on common inputs used in manufacture of exempted and taxable products.The Company has deposited the entire amount of demand under protest and the matter is pending before Hon'ble Customs, Excise and Service Tax Appellate Tribunal.The Company believes that it has merit in its case, hence no provision is required.

d) In respect of service tax demand, the Assessing Officer levied Service Tax on foreign services rendered & delivered outside India by the Company & certain other services on which there was no liability to pay Service Tax.The Company believes that it has merit in its case, hence no provision is required.

e) Maharashtra State Electricity Distribution Company Ltd. served a demand notice to the company on account of wrong tariff rates for the activities at R&D Center, Navi Mumbai.The Company has taken legal opinion which is in favour of the Company & hence no provision is considered necessary in this regard.

f) Liability on account of guarantees given to Government authorities for various purposes is considered remote. Hence,those have not been disclosed.

3. Foreign Currency Convertible Bonds

"US$ 50 Million Zero Coupon Convertible Bonds due 2011" amounting to US$ 36.8 million were pending for redemption or conversion (at the option of bondholders) as on March 31, 2010. Since these bonds were not converted, repurchased or cancelled during the current year, the Company has redeemed these bonds at a price equal to 142.80% of the outstanding principal amount on the maturity date i.e. February 14,2011.The premium on redemption of these bonds amounting to Rs.713.0 million and withholding tax thereon amounting to Rs.84.2 million have been adjusted against the Securities Premium Account.

The conversion price of'US$ 50 Million Zero Coupon Convertible Bonds due 2011' (FCCBs) was pre-determined at Rs.357.57 per Share.This rate was used to determine dilutive Equity Shares of the previous financial year.

b) Computation of net profit in accordance with Section 198 read with section 349 of the Companies Act, 1956 ("the Act") and maximum amount permissible for managerial remuneration.

2. Related Party Disclosures

A. Names of Related Parties

Names of related parties where control exists irrespective of whether transactions have occurred or not

(a) JointVentures - Chiron Panacea Vaccines Private Limited

- Cambridge Biostability Limited

(b) Subsidiaries - Best On Health Limited (BOH) (Wholly-owned subsidiary (WOS))

- RadicuraS Co.Limited (Indirect WOS through BOH),

- Panacea Hospitality Services Pvt. Ltd. (Indirect WOS through BOH)

- Panacea Educational Institute Pvt. Ltd. (Indirect WOS through BOH)

- Sunanda Steel Company Ltd. (Indirect WOS through BOH)

- Nirmala Organic Farms & Resorts Pvt. Ltd (Indirect WOS through BOH) w.e.f. February 23,2011

- Best On Health Foods Limited (Indirect WOS through BOH) w.e.f. December 6,2010

- Rees Investments Ltd. (Rees) (Guernsey):WOS

- Kelisia Holdings Ltd. (Cyprus): Indirect WOS through Rees

- Kelisia Investment Holding AG (KIH) (Switzerland): Indirect WOS through Kelisia Holdings Ltd.

- Panacea Biotec (International) SA (PBS) (Switzerland) (Indirect WOS through KIH)

- Panacea Biotec GmbH (Germany) (Indirect WOS through PBS)

- Panacea Biotec (Europe) AG, (Switzerland): Indirect WOS through PBS

- Panacea Biotec FZE, (UAE): WOS

- Panacea Biotec Germany GmbH (Germany) (Indirect WOS through PBS) w.e.f. August 12, 2010

- Panacea Biotec Inc.(USA):WOS

- NewRise Healthcare Private Limited (Formerly known as Umkal Medical Institute Pvt. Ltd.): Subsidiary

(c) Associates - PanEra Biotec Private Limited

- Lakshmi & Manager Holdings Ltd. (LMH)

- Best General Insurance Company Ltd. (Indirect Associate (subsidiary of LMH))

(d) Key Management -

Mr. Soshil Kumar Jain - Chairman and Whole-time Director

Personnel - Mr.Ravinder Jain - Managing Director

- Dr. Rajesh Jain - Joint Managing Director

- Mr.SandeepJain - Joint Managing Director

- Mr.SumitJain - Whole-time Director

(f) Relatives of Key Management personnel having transactions with the Company:

Mr. Ashwani Jain, Son-in-law of Mr. Soshil Kumar Jain

Mr. Shagun Jain, Son-in-law of Mr. Ravinder Jain

Mrs. Radhika Jain, Daughter of Mr. Ravinder Jain

Mrs. Shilpy Jain, Wife of Mr. Sumit Jain

Mr. Ankesh Jain, Son of Dr. Rajesh Jain

(g) Enterprises over which person(s) having control or significant influence over the Company / Key management personnel(s),along with their relatives, are able to exercise significant influence:

i) Neophar Alipro Ltd.;

ii) All India S. L.Jain Charitable Foundation;

iii) First Lucre Partnership Co.*;

iv) Second Lucre Partnership Co.*;

v) Radhika Associates;

vi) Sumit Nipun& Co.;

vii) Rattan Sons;

viii)Tahir&Co.;

ix) Best On Health Foods Ltd.;

x) Soshil Kumar Jain (HUF)*;

xi) Ravinder Jain (HUF)*;

xii) Rajesh Jain (HUF)*;

xiii) SandeepJain (HUF)*.

*These enterprises are also holding Shares in the Company.

3. Segment Information

Business Segments:

Panacea Biotec Limited is one of the India's leading research based companies engaged in the business of research, development, manufacture and marketing of Vaccines and Branded Pharmaceutical Formulations.The Company has products for various segments, which include pediatric vaccines, pain management,diabetes management and organ transplantation.

4. Leases

i. For assets given under Operating Lease agreements:

a) The Company has leased out the assets situated at Lalru, Punjab on operating lease to its Associate, PanEra Biotec Private Limited.

ii. For assets taken on Lease

a) The Company has taken various residential, office and godown premises under operating lease agreements.These are generally not non-cancelable and are renewable by mutual consent on mutually agreed terms.There is no sublease payments expected to be received under non-cancellable subleases at the balance sheet date and no restrictions is imposed by lease arrangements.

b) Lease payments for the year are Rs. 72.4 million (Previous year Rs. 70.3 million).

d) The Company has purchased software licenses on finance lease.The lease term is for 3 years after which the legal title is passed on to the lessee.There is no escalation clause in the lease agreement.There are no restrictions imposed by lease arrangements.

d) During the financial year 2009-10, Company's erstwhile Joint Venture Cambridge Biostability Limited (CBL) had initiated steps to place it into creditors'voluntary liquidation. Due to the financial position of erstwhile Joint Venture company, the Company has considered its investment and loan given to it doubtful for recovery. Accordingly provision created in earlier years for the said amount is continued in the current year.

5. Additional information as required under Para 3 & 4 of Part II of Schedule VI of the Companies Act, 1956.

A. Particulars of Licensed Capacity, Installed Capacity & Production a) Licensed Capacity per annum

Recombinant Bulk Vaccines - 18 million doses Others - Not Applicable

6. The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to maximum of Rs.1 million (except in case of Managing/ Joint Managing/Whole time Directors).The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarize the components of net benefit expense recognized in the Profit & Loss Account and the funded status and amounts recognized in the Balance Sheet for the respective plans.

7. The Company has incurred expenditure on Pre-Clinical Development studies amounting to Rs.67.2 million during the year (Previous year Rs. 32.1 million). This expenditure relates to studies carried out by Clinical Research Organization (CRO) towards obtaining registration of Company's products outside India primarily in US or Europe. The expenditure incurred has been capitalized and carried in Capital Work in Progress. Management believes that it is in the nature of development expenditure and meets the capitalization criteria set out in Accounting Standard 26 on Intangible Assets notified by the Companies Accounting Standard Rules, 2006 due to the following reasons:

The expenditure is not towards basic research and therefore no new chemical entity comes into being. This expenditure relates to the developmental work performed through external agencies (CROs). Safety profile of the basic molecule is well established in several countries in Europe and in India and the products are being marketed successfully in several countries under different brand names.

There is no experience to suggest that the studies conducted by CROs on behalf of the Company would lead to or make it difficult for the Company to obtain regulatory approvals in US and/or Europe.

The management believes that these products would be commercially viable and there is no reason to believe that there is any uncertainty that may lead to not securing registration for the products from regulatory authorities outside India primarily in US or Europe.

8. In accordance with Accounting Standard 9 on 'Revenue Recognition' notified by the Companies Accounting Standard Rules, 2006, Excise Duty on turnover amounting to Rs.3.6 million (Previous year Rs.8.0 million) has been reduced from turnover in Profit & Loss Account.

9. The Company had exercised the option as per the Companies (Accounting Standard) Amendment Rules, 2009 in the financial year 2008-09. As per the option, exchange differences related to long term foreign currency monetary items so far as they relate to the acquisition of depreciable capital assets are capitalized and depreciated the same over the useful life of the assets. In other cases, have transferred to Foreign Currency Monetary Item Translation Difference Account and amortized over the balance period of such long term assets/liabilities but not beyond accounting period ending on or before 31st March 2011.The unamortized balance in this account is Nil (Previous year Rs. 16.8 million (liability)).

10.The Company has appointed independent consultants for conducting a Transfer Pricing study to determine whether the transactions with associated enterprises were undertaken at "Arm's length basis" The management confirms that all international transactions with associated enterprises are undertaken at negotiated contracted prices on usual commercial terms. Further there has been no change in the terms of such international transactions till March 31,2011.

11. In the financial year 2009-10, the Company had received a capital subsidy of Rs.3.0 million under the Central Investment Subsidy Scheme, 2003 based on investment in plant & machinery as its manufacturing unit at Baddi, in the state of Himachal Pradesh which is in the nature of promoters' contribution. As per the scheme, the Company has to maintain such investment for a minimum period of five years. This has been treated as capital reserve in books of account.

12. Owing to recoveries,during the financial year 2009-10, the Company had written back the provision for bad and doubtful advances of Rs. 135.5 million created during earlier years on account of old recoverable from PanEra Biotec Pvt. Ltd., an associate company.The same had been shown as other income during the year 2009-10.

13. The President of India acting through Department of Biotechnology, Ministry of Science & Technology, and Government of India under Biotechnology Industrial Partnership Programme (BIPP) granted a loan for conducting the research Sdevelopment activities amounting to Rs.100 million for H1N1 project. The first loan disbursement of Rs.30 million was received in the financial year 2009-10 and second disbursement of Rs.48.3 million has been received in the current financial year. Repayment of the loan shall be in 10 equal half-yearly installments and repayment would commence one year after the completion of the said project.

14. During the current financial year, the Company has carried out buy back of 5,592,000 equity shares of face value of Re. 1 each at an average price of Rs. 196.39 per share,from the open markets through Stock Exchanges. The Company has accordingly transferred Rs. 5.5 million to Capital Redemption Reserve from Securities Premium Account and also utilized an amount of Rs. 1,092.8 million from Securities Premium Account towards the premium paid on the buyback of equity shares. Consequent to the buy back the proposed dividend and Dividend Distribution Tax thereon pertaining to the financial year 2009-10 amounting to Rs. 1.1 million and Rs.0.2 million respectively have been written back during the current financial year.

The shares so bought back have been considered to determine weighted average number of equity shares for the purpose of computing basic & diluted EPS.

15. During the year, the Company has initiated the process of Liquidation of one of its wholly owned subsidiary viz. Panacea Biotec Inc. (incorporated in the United States of America) as it is not currently operational. Accordingly, provision of Rs.2.4 million for permanent diminution in the value of Investments in Panacea Biotec Inc. has been made during the year.

16. 0.0 under "Rs. in million" represents amount less than Rs. 50,000 and 0.0 under units represents units less than 50,000.

17. Previous year's figures have been rearranged and reclassified wherever necessary to make them comparable with the current year's figures.


Mar 31, 2010

A. NATURE OF OPERATIONS

Panacea Biotec Limited is one of the Indias leading research based companies engaged in the business of research, development, manufacture and marketing of Branded Pharmaceutical Formulations and Vaccines. The Company has products for various segments, which include pain management, diabetes management, organ transplantation and pediatric vaccines.

(All amounts are in Rs. unless otherwise stated)

1. Contingent Liabilities (to the extent not provided for)

As at As at

March 31, 2010 March 31, 2010

Disputed demands/ show-cause notices under:-

a) Income Tax cases 777,204 110,557

b) Customs Duty cases 3,999,923 3,999,923

c) Central Excise Duty cases 6,596,620 6,596,620

d) Service Tax 2,744,567 29,789,842

Total 14,118,314 40,496,942

Uncalled liability on partly paid shares of Umkal Medical Institute Pvt. Ltd. 115,625,473 205,869,745 (Refer Schedule VI - Investments)

Demand from Maharashtra State Electricity Distribution Company Limited 8,055,506 -

(Refer note (e) below)

Labour cases (in view of large number of cases, it is impracticable to disclose each of them) 2,003,390 2,803,586

Premium on Redemption ofUS 50 Million Zero Coupon Convertible Bonds due 2011 564,995,867 470,992,269 (Refer note 3(ii) below)

Notes:

a) In respect of Income Tax demand for the Assessment Year 2007-08, the Assessing Officer disallowed Rs.2,259,000 under section 14A of the Act, computed in accordance with Rule 8D of the Act, contending the same to be expenditure incurred in relation to income which does not form part of the total income under the Act in the Order passed under section 143(3) of the Act. The company preferred appeal before the CIT (Appeals). The appeal is yet to be disposed off by the CIT (Appeals).

b) In respect of Customs Duty demand of Rs.3,999,923 towards Customs Duty on certain items imported as exempted by the Company, the Company has deposited the entire amount under protest.The matter is pending before the Honorable Supreme Court of India. No provision is considered necessary in this regard since the Company believes it has a good case based on nature of the case and legal advice obtained by it.

c) In respect of Central Excise Duty demand of Rs.6,596,620 towards Excise Duty on common inputs used in manufacture of exempted and taxable products, the Company has deposited the entire amount under protest. The matter is pending before Central Excise and Customs Tribunal. No provision is considered necessary in this regard since the Company believes it has a good case based on nature of the case and legal advice obtained by it.

d) In respect of service tax demand of Rs. 29,789,842 relating to foreign services rendered & delivered outside India & others services, which were brought in service tax net w.e.f. 18.04.06 and against which numerous decisions/judgments have been pronounced by the competent courts/judicial authorities, the Company has sent suitable reply to the concerned authority.The Company has assessed Rs.2,744,567 as contingent liability out of total demand. No provision is considered necessary on the balance amount in this regard since the Company believes it has a good case based on nature of the demand and legal advice obtained by it.

e) In respect of demand notice of Rs. 8,055,506 received from Maharashtra State Electricity Distribution Company Ltd. on account of wrong tariff rates for the activities at R&D center, Navi Mumbai, the Company has taken legal opinion which is in favor of the Company & thus no provision is considered necessary in this regard.

2. Foreign Currency Convertible Bonds

i) Conversion price ofUS$ 50 Million Zero Coupon Convertible Bonds due 2011 (FCCBs) has already been fixed at Rs. 357.57 per Share. This rate is used to determine dilutive Equity Shares against outstanding Bonds.

ii) US$ 50 Million Zero Coupon Convertible Bonds due 2011 amounting to US$ 36,800,000 are pending for redemption as on 31st March 2010. Unless these Bonds have been previously converted, redeemed, repurchased and cancelled, the Company will redeem these Bonds at a price equal to 142.80% of the outstanding principal amount on the maturity date i.e February 14, 2011 (including premium amounting to Rs. 707,271,712). Since the redemption of bonds is contingent upon its non-conversion into Equity Shares and the probability of redemption cannot presently be ascertained, the Company has not provided for the proportionate premium on redemption for the period up to 31 st March, 2010 amounting to Rs. 564,995,867 (Previous Year Rs. 470,992,269). Such premium has been disclosed as contingent liability. These Bonds are considered a monetary liability and are redeemable only if there is no conversion before maturity date.

iii) The Company has fully utilized the issue proceeds of‘US$ 50 Million Zero Coupon Convertible Bonds due 201 1in earlier years.

iv) The Company is obliged to pay dividend to those bondholders who convert their Bonds into Equity Shares after approval by the Board of the financial statements and upto the book closure date for dividend purposes. Incremental dividend and dividend distribution tax, if any, will be paid out of the balance available in the Profit & Loss Account.

3. Related Party Disclosures

A. Names of Related Parties

Names of related parties where control exists irrespective of whether transactions have occurred or not

a) Joint Ventures

- Chiron Panacea Vaccines Private Limited,

Cambridge Biostability Limited

b) Subsidiaries

- Best On Health Limited (BOH) (Wholly-owned subsidiary (WOS)) Radicura & Co. Limited (Indirect WOS through BOH), Panacea Hospitality Services Pvt. Ltd. (Indirect WOS through BOH) Panacea Educational Institute Pvt. Ltd. (Indirect WOS through BOH) Sunanda Steel Company Ltd. (Indirect WOS through BOH) Rees Investments Ltd. (Rees) (Guernsey): (WOS) Kelisia Holdings Ltd. (Cyprus): (Indirect WOS through Rees)

Kelisia Investment Holding AG (KIH) (Switzerland): (Indirect WOS through Kelisia Holdings Ltd.) Panacea Biotec (International) SA (PBS) (Switzerland): (Indirect WOS through KIH) Panacea Biotec (Europe) AG, (Switzerland): (Indirect WOS w.e.f. 10th June, 2009 through PBS) Panacea Biotec FZE, (UAE): (WOS) Panacea Biotec GmbH (Germany): (WOS) Panacea Biotec, Inc. (USA): (WOS) Umkal Medical Institute Pvt. Ltd.: (Subsidiary)

c) Associates

PanEra Biotec Private Limited

Lakshmi & Manager Holdings Ltd. (LMH)

Best General Insurance Co. Ltd (Indirect Associate (subsidiary of LMH))

d) Key Management Personnel

Mr. Soshil Kumar Jain - Chairman and Whole-time Director Mr.

RavinderJain - Managing Director

Dr. Rajesh Jain - Joint Managing Director

Mr.SandeepJain - Joint Managing Director

Mr.SumitJain - Whole-time Director

f) Relatives of Key Management personnel having transactions with the Company Mr. Ashwani Jain, Son-in-law of Mr. Soshil Kumar Jain

Mr. Shagun Jain, Son-in-law of Mr. Ravinder Jain Mrs. Radhika Jain, Daughter of Mr. Ravinder Jain Mrs. Shilpy Jain, Wife of Mr. Sumit Jain

g) Enterprises over which Person(s) having control or significant influence over the Company / Key management personnel(s), along with their relatives, are able to exercise significant influence:

i) NeopharAlipro Limited

ii) All India S. L. Jain Charitable Foundation

iii) First Lucre Partnership Co.*

iv) Second Lucre Partnership Co.*

v) Radhika Associates

vi) Sumit Nipun& Co.

vii) Rattan Sons

viii) Tahir&Co.

ix) Best On Health Foods Ltd.

x) Soshil Kumar Jain (HUF)*

xi) Ravinder Jain (HUF)*

xii) Rajesh Jain (HUF)*

xiii) Sandeep Jain (HUF)*

4. Segment Information

Business Segments:

Panacea Biotec Limited is one of the Indias leading research based companies engaged in the business of research, development, manufacture and marketing of Vaccines and Branded Pharmaceutical Formulations.The Company has products for various segments, which include pediatric vaccines, pain management, diabetes management and organ transplantation.

5. The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to maximum of Rs.350,000 (except in case of Managing/ Joint Managing/ Whole time Directors). The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The Company expects to contribute Rs.16,000,000 to gratuity fund in the year 2010-11.

Note: During the year some employees of the Company have been transferred to its Associate Company PanEra Biotec Pvt. Ltd. As per the agreed terms, the tenure of the service for computation for post employment benefits would be taken in computation of period served with the Company. Accordingly, the liability of Rs.3,430,285 for Gratuity and Rs.2,375,986 for Leave Encashment in respect of transferred employees as at the date of transfer has also been transferred to PanEra Biotec Pvt. Ltd.The process of transferring the gratuity amount lying in the Companys gratuity fund is in progress.

6. The Company has incurred expenditure on Pre-Clinical Development studies amounting to Rs.32,125,547 during the year (Previous Year Rs.123,978,449) and Rs.479,497,285 as of March 31,2010 (Rs.426,493,761 as of March 31,2009). This expenditure relates to studies carried out by Clinical Research Organization (CRO) towards obtaining registration of Companys products in US and /or Europe. The expenditure incurred has been capitalized and carried in Capital Work in Progress. Management believes that it is in the nature of development expenditure and meets the capitalization criteria set out in Accounting Standard 26 on Intangible Assets notified by the Companies Accounting Standard Rules, 2006 due to the following reasons:

- The expenditure is not towards basic research and therefore no new chemical entity comes into being. This expenditure relates to the developmental work performed through external agencies (CROs). Safety profile of the basic molecule is well established in several countries in Europe and in India and the products are being marketed successfully in several countries under different brand names.

- There is no experience to suggest that the studies conducted by CROs on behalf of the Company would lead to or make it difficult for the Company to obtain regulatory approvals in US and / or Europe.

The management believes that these products would be commercially viable and there is no reason to believe that there is any uncertainty that may lead to not securing registration for the products from regulatory authorities in US and / or Europe.

7. In accordance with Accounting Standard 9 onRevenue Recognitionnotified by the Companies Accounting Standard Rules, 2006, Excise Duty on turnover amounting to Rs.7,969,727 (Previous year Rs.18,845,112) has been reduced from turnover in Profit & Loss Account and differential Excise Duty on opening and closing stock of finished goods amounting to Rs.Nil (Previous year Rs.Nil) has been adjusted from Raw Materials, Finished Goods, Work in Progress and Job Processing charges in Schedule XIII.

8. The Company had exercised the option as per the Companies (Accounting Standard) Amendment Rules, 2009 in the financial year 2008-09. As per the option, exchange differences related to long term foreign currency monetary items so far as they relate to the acquisition of a depreciable capital assets are capitalized and depreciated the same over the useful life of the assets. In other cases, have transferred to Foreign Currency Monetary Item Translation Difference Account and amortized over the balance period of such long term assets/liabilities but not beyond accounting period ending on or before 31 st March 2011. The unamortized balance in this account is Rs.16,773,412 (liability) (Previous year Rs. 95,961,134 (asset)).

9. The Company has appointed independent consultants for conducting a Transfer Pricing study to determine whether the transactions with associated enterprises were undertaken at “arms length basis”. The management confirms that all international transactions with associated enterprises are undertaken at negotiated contracted prices on usual commercial terms. Further there has been no change in the terms of such international transactions till March 31,2010.

10. In the current year, the Company has received a capital subsidy of Rs.3,000,000 under the Central Investment Subsidy Scheme, 2003 based on investment in plant & machinery as its manufacturing unit at Baddi, in the state of Himachal Pradesh which is in the nature of promoterscontribution. As per the scheme, the Company has to maintain such investment for a minimum period of five years. This has been treated as capital reserve in books of account.

11. Owing to recoveries, during the year, the Company has written back the provision for bad and doubtful advances of Rs. 135,532,654 created during earlier years on account of old recoverable from PanEra Biotec Pvt. Ltd., an associate company. The same has been shown as other income during the year.

12. The Company has received a soft loan from President of India acting through Department of Biotechnology, Ministry of Science & Technology, Government of India under Biotechnology Industrial Partnership Programme (BIPP) for its H1 N1 project. Repayment of the loan shall be in 10 equal half-yearly installments and repayment would commence one year after the completion of the said project.

13. Previous years figures have been rearranged and reclassified wherever necessary to make them comparable with the current years figures.

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