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Notes to Accounts of RPG Life Sciences Ltd.

Mar 31, 2017

(b) The Company has only one class of shares i.e. equity shares having a face value of '' 8 each. Each shareholder is entitled to one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

Note: There are no delayed payments to Micro and Small Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 during the year. Further, there are no dues to such parties which are outstanding as at the Balance Sheet date. This information has been determined on the basis of information available with the Company regarding their status as Micro and Small Enterprises.

1. Intangible Assets are other than internally generated.

2. Additions to Building, Plant and Equipment Furniture and Fixtures and office equipment include Rs.44 lakhs (Previous year - Nil), Rs.97 lakhs (Previous year Rs.78 lakhs), Rs.7 lakhs (Previous year Nil) and Rs.3 lakhs (Previous year - Nil) respectively pertaining to Research and Development activities.

3. Deductions from Gross block and Accumulated depreciation includes assets of the Biotech business unit which was sold on a slump sale basis on July 6, 2017 [Refer Note No 30].

4. During the year, Trademarks were purchased on assignment/perpetual license basis from Sun Pharmaceutical Industries Limited (including its subsidiary, Sun Pharma Laboratories Limited) vide Asset Purchase Agreement (AP A) dated July 27,2016. These Trademarks were capitalised on October 21,2016 (closing date). Certain trademarks are in process of registration.

5. Computer Software includes assets acquired under finance lease amounting to Rs. 44 lakhs (Previous year Rs.21 lakhs) and Rs.14 Lakhs (Previous Year Rs.8 lakhs) under gross block and accumulated depreciation, respectively

6. Office Equipment includes assets acquired under finance lease amounting to Rs.26 Lakhs (Previous year Rs.26 lakhs) and Rs.14 Lakhs (Previous year Rs.6 lakhs) under gross block and accumulated depreciation, respectively.

7. Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of capital advances Rs.16 lakhs [Previous year Rs.39 lakhs] Rs.89 lakhs [Previous year Rs.199 lakhs].

8. (a) Pursuant to the approval of the Board of Directors at their meeting held on May 26, 2016, the Company had entered into a Business Transfer Agreement dated May 26, 2016 with Intas Pharmaceuticals Limited for sale of Biotech Business Unit, as a going concern on a slump sale basis, at a consideration of Rs.2,487 lakhs. The sale consideration had been received on July 6, 2016 (closing date). The gain realized from the aforesaid sale of Biotech Business Unit amounting to Rs.738 lakhs had been disclosed as an exceptional item in the financial results. The same has been considered as discontinuing operations in accordance with Accounting Standard - 24 - ''Discontinuing Operations''.

9. 2005 Employee Stock Option Plan (ESOP 2005)

Pursuant to a special resolution passed by the Shareholders at the Annual General Meeting held on 27th August, 2008, the Company adopted the Employee Stock Option Scheme titled ''2005 Employee Stock Option Plan'' (ESOP 2005) for employees and directors of the Company including those employees and directors who were to be granted options, pursuant to the Scheme of Arrangement sanctioned by the Hon''ble High Court of Judicature at Bombay on 14th December, 2007, in lieu of options that were granted by Brabourne Enterprise Limited (the transferor Company) under its ESOP 2005. The total number of equity shares reserved under the said plan is 250,000 equity shares of Rs.8 each. The details of such equity shares granted are as follows:

A) The Remuneration/Compensation Committee at its meeting held on 6th August, 2010 -

(a) Granted and vested 30,119 equity stock options to employees, in lieu of options that were granted to them by Brabourne Enterprise Limited. The employee had an option to apply for one equity share of Rs.8 each at an exercise price of '' 32.06. Of these options, 29,255 equity stock options had been exercised in earlier years and the remaining equity stock options have lapsed.

(b) Granted 95,000 equity stock options to the eligible director and employees of the Company, with an option for one equity share of Rs.8 each at an exercise price of Rs.100 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005.

All equity stock options had lapsed / forfeited in earlier years.

B) The Remuneration/Compensation Committee at its meeting held on 20th October, 2010 -

Granted 15,000 equity stock options to an eligible employee with an option for one equity share of '' 8 each at an exercise price of Rs.104 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005.

Of these options, 2,910 equity stock options were outstanding as of March 31, 2016 which have been exercised during the year. The remaining equity stock options have lapsed/forfeited in earlier years.

The Company has adopted intrinsic value method as permitted by the SEBI Guidelines and the Guidance Note on Accounting for Employee Share Based Payment issued by the Institute of Chartered Accountants of India to account for the cost of stock options to employees and a director of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. In view of the exercise price being higher than the closing market price on the day prior to the date of grant, the intrinsic value of the option is Nil. Consequently, the accounting value of the option (compensation cost) is also Nil.

The weighted average fair value of each stock option on the date of its grant is Rs.41.34, which has been vetted by an independent valuer. This fair value has been calculated using Black-Scholes Option Pricing Model. The inputs used for this calculation are (i) Average Share Price: Rs.91.33 on the date of grant (ii) Average Exercise Price: Rs.90.70 (iii) Average Expected Volatility: 47.98%

(iv) Average Option Life: 8 years (v) Average Expected Dividend Yield: 3.50%, and (vi) Average Risk Free Interest Rate: 8.08%. The daily volatility of the company''s shares on the National Stock Exchange over a period of time prior to the date of grant, corresponding with the expected life of the options, has also been considered for determining the fair value.

Had compensation cost for the stock options granted under ESOP 2005 been determined based on the fair value method, the Company''s Profit for the year and Earnings per Share would have been as per the pro forma amounts indicated below:

*Specified Bank Notes (SBNs) mean the bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees as defined under the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs no. S.O. 3407(E), dated the November 8, 2016.

10. Insurance Claim

On February 14, 2017, there was a minor fire incident in one of the plants of the Company. Due to the same, certain Fixed Assets having written down value of Rs.59 lakhs and Inventories of Raw Material, Work In Progress and Finished goods aggregating to Rs.124 lakhs were impacted/destroyed. Subsequently, the Company filed for an insurance claim for the loss of Fixed Assets and Inventory. Basis the surveyor report, the Company has accrued insurance claim receivable of Rs.193 Lakhs.

11. Forward Contracts and Unhedged Foreign Currency Outstanding Balances

The Company uses forward contracts to hedge its risks of net exposure associated with foreign currency fluctuations. The Company does not enter into any forward contract which is intended for trading or speculative purposes.

(a) The details of forward contracts outstanding against foreign currency Receivables as at the Balance Sheet date are as follows:

12. Employee Benefits

(A) Defined Contribution Plans

The Company has recognized the following amounts in the Statement of Profit and Loss for the year:

(B) Defined Benefit Plan

Valuation in respect of Gratuity has been carried out by independent actuary, as at the Balance Sheet date, based on the following assumptions:

Notes:

(a) The primary reporting of the Company is based on the business segment. The Company has only one reportable business segment which is manufacturing and marketing of pharmaceutical products. Accordingly, the figures appearing in these financial statements relate to pharmaceutical products.

(b) Secondary segment reporting is based on the geographical location of customers. Revenue is segregated in to two segments namely India and Other Countries for the purpose of reporting geographical segments.

(c) The accounting policies adopted for segment reporting are in line with the accounting policies adopted for the preparation of financial statements as disclosed in Note 2.

13. Related Party Disclosures

(A) Related parties with whom the Company had transactions during the year Key Management Personnel CT. Renganathan

14. Leases

(I) Disclosures for Finance Leases

The Company has acquired certain Computer Software and Office Equipment under Finance Lease. The details of minimum lease payments outstanding as at the Balance Sheet date in respect of these assets are as under:

15. Earnings per share

Basic earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year. Diluted earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year and also the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. Dilutive potential equity shares that have been converted in to equity shares during the year are included in the calculation of diluted earnings per share from the beginning of the year to the date of conversion and from the date of conversion, the resulting equity shares are included in computing both basic and diluted earnings per share. Earnings per Share has been computed as under:

16. Previous year''s figures have been regrouped / reclassified wherever necessary.


Mar 31, 2016

Note: There are no delayed payments to Micro and Small Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 during the year. Further, there are no dues to such parties which are outstanding as at the Balance Sheet date. This information has been determined on the basis of information available with the Company regarding their status as Micro and Small Enterprises.

1. Intangible Assets are other than internally generated.

2. Additions to Building, Plant and Equipment and Furniture and Fixtures include Nil (Previous year - 5 Lakhs), Rs, 78 Lakhs (Previous year Rs, 90 Lakhs) and Nil (Previous year Rs, 1 Lakhs) respectively pertaining to Research and Development activities.

3. In the previous year, pursuant to the enactment of the Companies Act, 2013, effective 1st April, 2014, the management has evaluated and reassessed the useful life of its fixed assets. Consequent to such change, the charge on account of depreciation for the previous year is higher by Rs, 37 Lakhs. Further, fixed assets of Rs, 1 lakh having no residual life as at 1st April, 2014, have been recognized in the opening balance of General Reserve in the previous year.

4. Depreciation expense for previous year includes prior period credit of Rs, 56 Lakhs representing impact of rectification in the classification and estimated useful life of certain fixed

assets.

5. Computer Software includes assets acquired under finance lease amounting to Rs, 21 Lakhs and Rs, 8 Lakhs under gross block and accumulated depreciation, respectively.

6. Office Equipment includes assets acquired under finance lease amounting to Rs, 26 Lakhs and Rs, 6 Lakhs under gross block and accumulated depreciation, respectively.

7. Vehicles - Under Lease represent assets acquired under finance lease.

8. Provision for Doubtful Debts and Advances (Net) for the previous year includes credit of an amount of Rs, 414 Lakhs recovered from a party towards which provision was created in Financial Year 2013

9. Accordingly, the provision had been reversed by the amount received.

10. 2005 Employee Stock Option Plan (ESOP 2005)

Pursuant to a special resolution passed by the Shareholders at the Annual General Meeting held on 27th August, 2008, the Company adopted the Employee Stock Option Scheme titled ‘2005 Employee Stock Option Plan’ (ESOP 2005) for employees and directors of the Company including those employees and directors who were to be granted options, pursuant to the Scheme of Arrangement sanctioned by the Hon’ble High Court of Judicature at Bombay on 14th December, 2007, in lieu of options that were granted by Brabourne Enterprise Limited (the transferor Company) under its ESOP 2005. The total number of equity shares reserved under the said plan is 250,000 equity shares of '' 8 each. The details of such equity shares granted are as follows:

A) The Remuneration/Compensation Committee at its meeting held on 6th August, 2010 -

(a) Granted and vested 30,119 equity stock options to employees, in lieu of options that were granted to them by Brabourne Enterprise Limited. The employee had an option to apply for one equity share of Rs, 8 each at an exercise price of Rs, 32.06.

Of these options, 29,255 equity stock options have been exercised as on 31st March, 2016 and the remaining equity stock options have lapsed.

(b) Granted 95,000 equity stock options to the eligible director and employees of the Company, with an option for one equity share of Rs, 8 each at an exercise price of Rs, 100 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/ Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005.

As on 31st March, 2016 all equity stock options have lapsed / forfeited.

B) The Remuneration/Compensation Committee at its meeting held on 20th October, 2010 -

Granted 15,000 equity stock options to an eligible employee with an option for one equity share of Rs, 8 each at an exercise price of Rs, 104 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005. Of these options, 2,910 equity stock options remain outstanding as on 31st March, 2016 and the remaining equity stock options have lapsed / forfeited.

The Company has adopted intrinsic value method as permitted by the SEBI Guidelines and the Guidance Note on Accounting for Employee Share Based Payment issued by the Institute of Chartered Accountants of India to account for the cost of stock options to employees and a director of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. In view of the exercise price being higher than the closing market price on the day prior to the date of grant, the intrinsic value of the option is Nil. Consequently, the accounting value of the option (compensation cost) is also Nil.

The weighted average fair value of each stock option on the date of its grant is Rs, 41.34, which has been vetted by an independent valuer. This fair value has been calculated using Black-Scholes Option Pricing Model. The inputs used for this calculation are (i) Average Share Price: Rs, 91.33 on the date of grant (ii) Average Exercise Price: Rs, 90.70 (iii) Average Expected Volatility: 47.98% (iv) Average Option Life: 8 years (v) Average Expected Dividend Yield: 3.50%, and (vi) Average Risk Free Interest Rate: 8.08%. The daily volatility of the company’s shares on the National Stock Exchange over a period of time prior to the date of grant, corresponding with the expected life of the options, has also been considered for determining the fair value.

Notes:

(a) Consumption of Materials includes consumption by third parties under contract with the Company and consumption in respect of physician samples.

(b) Components and spare parts referred to in paragraph VIII(c) of Additional Information under General Instructions for Preparation of Statement of Profit and Loss in Part II of Schedule III of the Companies Act, 2013 are assumed to be those forming part of the finished goods produced and not those used for maintenance of plant and machinery.

11. Forward Contracts and Unheeded Foreign Currency Outstanding Balances

The Company uses forward contracts to hedge its risks of net exposure associated with foreign currency fluctuations. The Company does not enter into any forward contract which is intended for trading or speculative purposes.

*Amount is below the rounding off norm adopted by the Company.

(B) Defined Benefit Plan

Valuation in respect of Gratuity has been carried out by independent actuary, as at the Balance Sheet date, based on the following assumptions:

(C) Other Employee Benefits

Long-term and short-term liabilities for Compensated Absences as at the Balance Sheet date were Rs, 199 Lakhs (Previous year Rs, 158 Lakhs) and Rs, 96 Lakhs (Previous year Rs, 98 Lakhs) respectively.

Notes:

(a) The primary reporting of the Company is based on the business segment. The Company has only one reportable business segment which is manufacturing and marketing of pharmaceutical products. Accordingly, the figures appearing in these financial statements relate to pharmaceutical products.

(b) Secondary segment reporting is based on the geographical location of customers. Revenue is segregated in to two segments namely India and Other Countries for the purpose of reporting geographical segments.

(c) The accounting policies adopted for segment reporting are in line with the accounting policies adopted for the preparation of financial statements as disclosed in Note 2.

12. Related Party Disclosures

(A) Related parties with whom the Company had transactions during the year

Key Management Personnel Ajit Singh Chouhan (upto 30th September, 2014)

CT. Renganathan (from 02nd January, 2015)

*In view of inadequacy of profit for the year 2014-15, remuneration aggregating to Rs, 31 Lakhs paid to the Managing Director (MD) of the Company in the previous year was in excess of the limit prescribed under Section 197 of the Act. The same has been recovered in the current year.

13. Earnings per share

Basic earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year. Diluted earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year and also the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. Dilutive potential equity shares that have been converted in to equity shares during the year are included in the calculation of diluted earnings per share from the beginning of the year to the date of conversion and from the date of conversion, the resulting equity shares are included in computing both basic and diluted earnings per share. Earnings per Share has been computed as under:

14. Previous year’s figures have been regrouped / reclassified wherever necessary.

Only Audit Committee and Stakeholder’s Relationship Committee positions are considered.

Ms. Neera Saggi resigned from the Directorship of the Company, w.e.f. October 29, 2015.

Ms. Zahabiya Khorakiwala has been appointed as an Independent Director on the Board of the Company w.e.f. October 29, 2015.


Mar 31, 2015

1. Background

RPG Life Sciences Limited (the 'Company') was incorporated on 29th March, 2007 as RPG Pharmaceuticals Limited. The name of the Company was subsequently changed to RPG Life Sciences Limited on 13th February, 2008.

Pursuant to a Scheme of Arrangement, the Company has acquired the pharmaceuticals business of Brabourne Enterprises Limited (formerly RPG Life Sciences Limited) with retrospective effect from the appointed date of 2nd April, 2007.

Terms of Repayment

Repayable in 36 Equated Monthly Instalments beginning from the time loan is taken along with interest ranging from 10.25% to 10.75%.

Monthly payment of Equated Monthly Instalments beginning from the month subsequent to taking the lease.

Repayable in 12 Equated quarterly Installments beginning from the month of taking the lease along with interest at 14.09% to 14.36% per annum. Working Capital Loans are secured by hypothecation of inventory and book debts and second charge on immoveable assets at Thane / Ankleshwar Factory.

Note: There are no delayed payments to Micro and Small Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 during the year. Further, there are no dues to such parties which are outstanding as at the Balance Sheet date. This information has been determined on the basis of information available with the Company regarding their status as Micro and Small Enterprises.

2. Contingent Liabilities

(a) Claims against the company not acknowledged as debts

(i) Sales tax matters - 118

(ii) Excise matters - 53

(iii) Service tax matters - 237

(b) Guarantee given to Gujarat Industrial Development Corporation 15 15

(c) Bank guarantees given to third parties 293 200

Notes:

(i) Future cash outflows including interest in respect of (a)(i) to (a) (iii) above are determinable only on receipt of judgments/ decisions pending with various authorities/forums and/or final outcome of the matters.

(ii) The management is of opinion that there will be no impact on future cash outflow of the Company in respect of (b) and

(c) above.

3. Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 740 lakhs [Previous year Rs. 168 lakhs].

4. Provision for Doubtful Debts and Advances (Net) includes credit of an amount of Rs. 414 lakhs recovered from a party towards which provision was created in the previous year. Accordingly, the provision has been reversed by the amount received.

5. 2005 Employee Stock Option Plan (ESOP 2005)

Pursuant to a special resolution passed by the Shareholders at the Annual General Meeting held on 27th August, 2008, the Company adopted the Employee Stock Option Scheme titled '2005 Employee Stock Option Plan' (ESOP 2005) for employees and Directors of the Company including those employees and Directors who were to be granted options, pursuant to the Scheme of Arrangement sanctioned by the Hon'ble High Court of Judicature at Bombay on 14th December, 2007, in lieu of options that were granted by Brabourne Enterprise Limited (the transferor Company) under its ESOP 2005. The total number of equity shares reserved under the said plan is 250,000 equity shares of ' 8 each. The details of such equity shares granted are as follows:

(A) The Remuneration/Compensation Committee at its meeting held on 6th August, 2010 -

(a) Granted and vested 30,119 equity stock options to employees, in lieu of options that were granted to them by Brabourne Enterprise Limited. The employee had an option to apply for one equity share of Rs. 8 each at an exercise price of Rs. 32.06. Of these options, 29,255 equity stock options have been exercised as on 31st March, 2015 and 864 options remain outstanding as on 31st March, 2015.

Notes forming part of the Financial Statements as at and for the year ended 31st March, 2015

(b) Granted 95,000 equity stock options to the eligible Director and employees of the Company, with an option for one equity share of Rs. 8 each at an exercise price of Rs. 100 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005.

Of these options, 6,240 equity stock options remain outstanding as on 31st March, 2015 and the remaining equity stock options have lapsed / forfeited.

(B) The Remuneration/Compensation Committee at its meeting held on 20th October, 2010 -

Granted 15,000 equity stock options to an eligible employee with an option for one equity share of Rs. 8 each at an exercise price of Rs. 104 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005. of these options, 2,910 equity stock options remain outstanding as on 31st March, 2015 and the remaining equity stock options have lapsed /forfeited.

The Company has adopted intrinsic value method as permitted by the SEBI Guidelines and the Guidance Note on Accounting for Employee Share Based Payment issued by the Institute of Chartered Accountants of India to account for the cost of stock options to employees and a Director of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. In view of the exercise price being higher than the closing market price on the day prior to the date of grant, the intrinsic value of the option is Nil. Consequently, the accounting value of the option (compensation cost) is also Nil.

Movement in the Options under ESOP 2005:

The weighted average fair value of each stock option on the date of its grant is Rs. 41.34, which has been vetted by an independent valuer. This fair value has been calculated using Black-Scholes Option Pricing Model. The inputs used for this calculation are (i) Average Share Price: Rs. 91.33 on the date of grant, (ii) Average Exercise Price: Rs. 90.70, (iii) Average Expected Volatility: 47.98%,

(iv) Average Option Life: 8 years, (v) Average Expected Dividend Yield: 3.50% and (vi) Average Risk Free Interest Rate: 8.08%. The daily volatility of the Company's shares on the National Stock Exchange over a period of time prior to the date of grant, corresponding with the expected life of the options, has also been considered for determining the fair value.

Had compensation cost for the stock options granted under ESOP 2005 been determined based on the fair value method, the Company's Profit for the year and Earnings per Share would have been as per the pro forma amounts indicated below:

6. Exceptional Items for the previous year comprise of profit of Rs. 6,172 lakhs on sale of a portion of leasehold land and building thereon and the Company's share of interest income of Rs. 242 lakhs earned on the sale consideration of Rs. 7,025 lakhs (net of expenses) deposited by the buyer in an escrow account, jointly held in the name of the Company and the buyer, till the execution of the sale deed. The amount of sale consideration and the Company's share of interest income lying in the escrow account had been transferred to the Company on the date of execution of the sale deed.

Notes:

(a) Consumption of Materials includes consumption by third parties under contract with the Company and consumption in respect of physician samples.

(b) Components and spare parts referred to in paragraph VIII(c) of Additional Information under General Instructions for Preparation of Statement of Profit and Loss in Part II of Schedule III of the Companies Act, 2013 are assumed to be those forming part of the finished goods produced and not those used for maintenance of plant and machinery.

7. Forward Contracts and Unhedged Foreign Currency Outstanding Balances

The Company uses forward contracts to hedge its risks of net exposure associated with foreign currency fluctuations. The Company does not enter into any forward contract which is intended for trading or speculative purposes.

(a) The details of forward contracts outstanding as at the Balance Sheet date are as follows:

(C) Other Employee Benefits

Long-term and short-term liabilities for Compensated Absences as at the Balance Sheet date were Rs. 158 lakhs (Previous year Rs. 142 lakhs) and Rs. 98 lakhs (Previous year Rs. 92 lakhs), respectively.

Notes:

(a) The primary reporting of the Company is based on the business segment. The Company has only one reportable business segment which is manufacturing and marketing of pharmaceutical products. Accordingly, the figures appearing in these financial statements relate to pharmaceutical products.

(b) Secondary segment reporting is based on the geographical location of customers. Revenue is segregated in to two segments namely India and Other Countries for the purpose of reporting geographical segments.

(c) The accounting policies adopted for segment reporting are in line with the accounting policies adopted for the preparation of financial statements as disclosed in Note 2.

*In view of Inadequacy of profit for the year 2014-15, remuneration aggregating to Rs. 31 lakhs paid to the Managing Director (MD) of the Company is in excess of the limit prescribed under Section 197 of the Act. Pending approval of the Central Government , the said amount is being held in trust by the MD.

8. Leases

(I) Disclosures for Finance Leases

The Company has acquired certain Vehicles and Computer Software under Finance Lease. The details of minimum lease payments outstanding as at the Balance Sheet date in respect of these assets are as under:

9. Earnings per Share

Basic earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year. Diluted earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year and also the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. Dilutive potential equity shares that have been converted in to equity shares during the year are included in the calculation of diluted earnings per share from the beginning of the year to the date of conversion and from the date of conversion, the resulting equity shares are included in computing both basic and diluted earnings per share. Earnings per Share has been computed as under:

10. Previous year's figures have been regrouped / reclassified wherever necessary. Signatures to Notes 1 to 48

Notes:

1. The above Cash Flow Statement has been prepared under the 'Indirect Method' as set out in the Accounting Standard - 3 on Cash Flow Statements, notified under sub-section (3C) of Section 211 of the Companies Act, 1956. [Refer Note 2(a)]

2. Previous year figures have been regrouped where necessary.


Mar 31, 2014

1. Background

RPG Life Sciences Limited (the ''company'') was incorporated on 29th March, 2007 as RPG Pharmaceuticals Limited. The name of the company was subsequently changed to RPG Life Sciences Limited on 13th February, 2008.

Pursuant to a Scheme of Arrangement, the company acquired the pharmaceuticals business of Brabourne Enterprises Limited (formerly RPG Life Sciences Limited) with retrospective effect from the appointed date of 2nd April, 2007.

(a) The company has only one class of shares i.e. Equity Shares having a face value of Rs. 8 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

(b) Shares reserved for issue under options

Refer Note 30 for details of shares to be issued under the Employee Stock Option Plan.

Note: There are no delayed payments to Micro and Small Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 during the year. Further, there are no dues to such parties which are outstanding as at the Balance Sheet date. This information has been determined on the basis of information available with the company.

As at As at 31st March, 2014 31st March, 2013

Rs. in lakhs Rs. in lakhs

2. Contingent Liabilities

(a) Claims against the company not acknowledged as debts

(i) Sales tax matters 118 118

(ii) Excise matters 53 53

(iii) Service tax matters 237 237

(b) Guarantee given to Gujarat Industrial Development Corporation 15 15

(c) Bank guarantees given to third parties 200 158

Notes:

(i) Future cash outflows in respect of (a)(i) to (a)(iii) above are determinable only on receipt of judgments/decisions pending with various authorities/forums and/or final outcome of the matters.

(ii) The management is of opinion that there will be no impact on future cash outflow of the company in respect of (b) and (c) above.

3. 2005 Employee Stock Option Plan

Pursuant to a special resolution passed by the Shareholders at the Annual General Meeting held on 27th August, 2008, the company adopted the Employee Stock Option Scheme titled ''2005 Employee Stock Option Plan'' (ESOP 2005) for employees and directors of the company including those employees and directors who were to be granted options, pursuant to the Scheme of Arrangement sanctioned by the Hon''ble High Court of Judicature at Bombay on 14th December, 2007, in lieu of options that were granted by Brabourne Enterprise Limited (the transferor company) under its ESOP 2005. The total number of equity shares reserved under the said plan is 250,000 equity shares of Rs. 8 each. The details of such equity shares granted are as follows:

(A) The Remuneration/Compensation Committee at its meeting held on 6th August, 2010 -

(a) Granted and vested 30,119 equity stock options to employees, in lieu of options that were granted to them by Brabourne Enterprise Limited. The employee had an option to apply for one equity share of Rs. 8 each at an exercise price of Rs. 32.06.

Of these options, 28,391 equity stock options have been exercised in earlier years and 1,728 options remain outstanding as on 31st March, 2014.

(b) Granted 95,000 equity stock options to the eligible director and employees of the company, with an option for one equity share of Rs. 8 each at an exercise price of Rs. 100 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005.

Of these options, 6,240 equity stock options remain outstanding as on 31st March, 2014 and the remaining equity stock options have lapsed / forfeited.

(B) The Remuneration/Compensation Committee at its meeting held on 20th October, 2010 - Granted 15,000 equity stock options to an eligible employee with an option for one equity share of Rs. 8 each at an exercise price of Rs. 104 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005.

Of these options, 2,910 equity stock options remain outstanding as on 31st March, 2014 and the remaining equity stock options have lapsed / forfeited.

The company has used intrinsic value method to account for the cost of stock options to employees and a director of the company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. In view of the exercise price being higher than the closing market price on the day prior to the date of grant, the intrinsic value of the option is Nil. Consequently, the accounting value of the option (compensation cost) is also Nil.

The weighted average fair value of each stock option on the date of its grant is Rs. 41.34, which has been vetted by an independent valuer. This fair value has been calculated using Black-Scholes Option Pricing Model. The inputs used for this calculation are (i) Average Share Price: Rs. 91.33 on the date of grant (ii) Average Exercise Price: Rs. 90.70 (iii) Average Expected Volatility: 47.98%

(iv) Average Option Life: 8 years (v) Average Expected Dividend Yield: 3.50%, and (vi) Average Risk Free Interest Rate: 8.08%. The daily volatility of the company''s shares on the National Stock Exchange over a period of time prior to the date of grant, corresponding with the expected life of the options, has also been considered for determining the fair value.

4. In the previous year, the company had entered into an Memorandum of Understanding (the ''MOU'') with a buyer for sale of a portion of leasehold land and building thereon, which were disclosed as assets held for sale as at the Balance Sheet date [Refer Note 19]. The sale deed has been executed on 6th June, 2013. Exceptional Items for the year ended 31st March, 2014 comprise of profit of Rs. 6,172 lakhs on the aforesaid sale of a portion of leasehold land and building thereon and the company''s share of interest income of Rs. 242 lakhs earned on the sale consideration of Rs. 7,025 lakhs (net of expenses) deposited by the buyer in an escrow account, jointly held in the name of the company and the buyer, till the execution of the sale deed. The amount of sale consideration and the company''s share of interest income lying in the escrow account has been transferred to the company on the date of execution of the sale deed.

5. Provision for Doubtful Debts and Advances (Net) for the year ended 31st March, 2014 includes an amount of Rs. 674 lakhs towards receivable from certain parties to whom pharmaceutical goods were supplied as per contracts and for which these parties have reneged on the contractual payment terms. The company has initiated legal action against these parties. Without prejudice to the position that Rs. 674 lakhs is recoverable, the company has made provision for the same.

6. During the year ended 31st March, 2014, a cyber fraud was committed by unknown hackers on the company whereby illegal and unauthorised online bank transfers were made to unknown accounts from the company''s bank account for the amounts aggregating to Rs. 241 lakhs through internet banking. Internal investigation has confirmed that none of the employees of the company were involved in the aforesaid fraudulent transactions. The case is filed with the Metropolitan Magistrate Court, Mumbai and is currently being investigated by the Police and the Court. As the company has been fully compensated for the above loss, no provision has been recognised by the company in the books of accounts as at 31st March, 2014.

Notes:

(a) Consumption of Raw Materials includes consumption by third parties under contract with the company and consumption in respect of physician samples.

(b) Components and spare parts referred to in Paragraph (viii)(c) of Additional Information (Paragraph 5) under General Instructions for Preparation of Statement of Profit and Loss in Part II of Schedule VI of the Act are assumed to be those forming part of the finished goods produced and not those used for maintenance of plant and machinery.

(C) Other Employee Benefits

Long-term and short-term liabilities for Compensated Absences as at the Balance Sheet date were Rs. 142 lakhs (Previous year Rs. 125 lakhs) and Rs. 92 lakhs (Previous year Rs. 82 lakhs) respectively.

Notes:

(a) The primary reporting of the company is based on the business segment. The company has only one reportable business segment which is manufacturing and marketing of pharmaceutical products. Accordingly, the figures appearing in these financial statements relate to pharmaceutical products.

(b) Secondary segment reporting is based on the geographical location of customers. Revenue is segregated in to two segments namely India and Other Countries for the purpose of reporting geographical segments.

(c) The accounting policies adopted for segment reporting are in line with the accounting policies adopted for the preparation of financial statements as disclosed in Note 2.

7. Previous year''s figures have been regrouped / reclassified where necessary.


Mar 31, 2013

1. Background

RPG Life Sciences Limited (the ''company'') was incorporated on 29th March, 2007 as RPG Pharmaceuticals Limited. The name of the company was subsequently changed to RPG Life Sciences Limited on 13th February, 2008.

Pursuant to a Scheme of Arrangement, the company acquired the pharmaceuticals business of Brabourne Enterprises Limited (formerly RPG Life Sciences Limited) with retrospective effect from the appointed date of 2nd April, 2007.

2. Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 110 lakhs (Previous year Rs. 202 lakhs).

3. 2005 Employee Stock Option Plan

Pursuant to a special resolution passed by the Shareholders at the Annual General Meeting held on 27th August, 2008, the company adopted the Employee Stock Option Scheme titled ''2005 Employee Stock Option Plan'' (ESOP 2005) for employees and directors of the company including those employees and directors who were to be granted options, pursuant to the Scheme of Arrangement sanctioned by the Hon''ble High Court of Judicature at Bombay on 14th December, 2007, in lieu of options that were granted by Brabourne Enterprise Limited (the transferor company) under its ESOP 2005. The total number of equity shares reserved under the said plan is 250,000 equity shares of Rs. 8 each. The details of such equity shares granted are as follows:

(A) The Remuneration/Compensation Committee at its meeting held on 6th August, 2010 -

(a) Granted and vested 30,119 equity stock options to employees, in lieu of options that were granted to them by Brabourne Enterprise Limited. The employee had an option to apply for one equity share of Rs. 8 each at an exercise price of Rs. 32.06.

Of these options, 28,391 equity stock options have been exercised in earlier years and 1,728 options remain outstanding as on 31st March, 2013.

(b) Granted 95,000 equity stock options to the eligible director and employees of the company, with an option for one equity share of Rs. 8 each at an exercise price of Rs. 100 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005.

Of these options, 6,240 equity stock options remain outstanding as on 31st March, 2013 and the remaining equity stock options have lapsed / forfeited.

(B) The Remuneration/Compensation Committee at its meeting held on 20th October, 2010 -

Granted 15,000 equity stock options to an eligible employee with an option for one equity share of Rs. 8 each at an exercise price of Rs. 104 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005. Of these options, 2,910 equity stock options remain outstanding as on 31st March, 2013 and the remaining equity stock options have lapsed / forfeited.

(C) The Remuneration/Compensation Committee at its meeting held on 28th April, 2011 -

Granted 20,000 equity stock options to an eligible employee with an option for one equity share of Rs. 8 each at an exercise price of Rs. 80 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005. All of these stock options have been forfeited during the year, thus outstanding equity stock options as on 31st March, 2013 are Nil.

(D) The Remuneration/Compensation Committee at its meeting held on 19th August, 2011 -

Granted 30,000 equity stock options to eligible employees with an option for one equity share of Rs. 8 each at an exercise price of Rs. 76 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005. All of these stock options have been forfeited during the year, thus outstanding equity stock options as on 31st March, 2013 are Nil. The company has used intrinsic value method to account for the cost of stock options to employees and a director of the company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. In view of the exercise price being higher than the closing market price on the day prior to the date of grant, the intrinsic value of the option is Nil. Consequently, the accounting value of the option (compensation cost) is also Nil.

Movement in the Options under ESOP 2005:

The weighted average fair value of each stock option on the date of its grant is Rs. 41.34, which has been vetted by an independent valuer. This fair value has been calculated using Black-Scholes Option Pricing Model. The inputs used for this calculation are (i) Average Share Price: Rs. 91.33 on the date of grant (ii) Average Exercise Price: Rs. 90.70 (iii) Average Expected Volatility: 47.98% (iv) Average Option Life: 8 years (v) Average Expected Dividend Yield: 3.50%, and (vi) Average Risk Free Interest Rate: 8.08%. The daily volatility of the company''s shares on the National Stock Exchange over a period of time prior to the date of grant, corresponding with the expected life of the options, has also been considered for determining the fair value.

Had compensation cost for the stock options granted under ESOP 2005 been determined based on the fair value method, the company''s Profit for the year and Earnings per Share would have been as per the pro-forma amounts indicated below:

4. During the year, the company has entered into an Memorandum of Understanding (the ''MOU'') with a buyer for sale of a portion of leasehold land and building thereon, which have been disclosed as assets held for sale as at the Balance Sheet date [Refer Note 20]. As per the MOU, the consideration has been deposited by the buyer in an escrow account jointly held in the name of the company and the buyer. Interest accrued thereon will be shared equally amongst both the parties on completion of the transaction. Pending completion of the transaction, the company has not accounted for its share of interest income of Rs. 195 lakhs (Previous year - Nil) accrued on the aforesaid escrow account up to the Balance Sheet date.

5. Forward Contracts and Unhedged Foreign Currency Outstanding Balances

The company uses forward contracts to hedge its risks of net exposure associated with foreign currency fluctuations. The company does not enter into any forward contract which is intended for trading or speculative purposes.

6. Related Party Disclosures

(A) Enterprise where control exists

*No transactions during the year

@Consequent to acquisition of additional shares of the company during the year by one of the subsidiaries of Swallow Associates Limited, a Promoter Group Company, the company became a subsidiary of Swallow Associates Limited with effect from 13th July, 2012 in terms of the provisions of sub-section (3) of Section 4 of the Act. However, on conversion of Swallow Associates Limited to Swallow Associates LLP (''SAL''), the company ceased to be a subsidiary of Swallow Associates Limited with effect from 31st October, 2012. SAL along with its subsidiaries, now holds 52.64% of the paid-up share capital of the company as at 31st March, 2013.

7. Earnings per Share

Basic earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year. Diluted earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year and also the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. Dilutive potential equity shares that have been converted in to equity shares during the year are included in the calculation of diluted earnings per share from the beginning of the year to the date of conversion and from the date of conversion, the resulting equity shares are included in computing both basic and diluted earnings per share. Earnings per Share has been computed as under:

8. Previous year''s figures have been regrouped / reclassified where necessary.


Mar 31, 2012

1. Background

RPG Life Sciences Limited (the 'company') was incorporated on 29th March, 2007 as RPG Pharmaceuticals Limited. The name of the company was subsequently changed to RPG Life Sciences Limited on 13th February, 2008.

Pursuant to a Scheme of Arrangement, the company acquired the pharmaceuticals business of Brabourne Enterprises Limited (formerly RPG Life Sciences Limited) with retrospective effect from the appointed date of 2nd April, 2007.

2. Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 202 lakhs (Previous year Rs. 62 lakhs).

3. 2005 Employee Stock Option Plan

Pursuant to a special resolution passed by the Shareholders at the Annual General Meeting held on 27th August, 2008, the company adopted the Employee Stock Option Scheme titled '2005 Employee Stock Option Plan' (ESOP 2005) for employees and directors of the company including those employees and directors who were to be granted options, pursuant to the Scheme of Arrangement sanctioned by the Hon'ble High Court of Judicature at Bombay on 14th December, 2007, in lieu of options that were granted by Brabourne Enterprise Limited (the transferor company) under its ESOP 2005. The total number of equity shares reserved under the said plan is 250,000 equity shares of Rs. 8 each. The details of such equity shares granted are as follows:

(A) The Remuneration/Compensation Committee at its meeting held on 6th August, 2010 -

(a) Granted and vested 30,119 equity stock options to employees, in lieu of options that were granted to them by Brabourne Enterprise Limited. The employee had an option to apply for one equity share of Rs. 8 each at an exercise price of Rs. 32.06. Of these options, 28,391 equity stock options have been exercised and 1,728 options remain outstanding as on 31st March, 2012.

(b) Granted 95,000 equity stock options to the eligible director and employees of the company, with an option for one equity share of Rs. 8 each at an exercise price of Rs. 100 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005.

Of these options, 41,114 equity stock options remain outstanding as on 31st March, 2012 and the remaining equity stock options have lapsed.

(B) The Remuneration/Compensation Committee at its meeting held on 20th October, 2010 - Granted 15,000 equity stock options to an eligible employee with an option for one equity share of Rs. 8 each at an exercise price of Rs. 104 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005.

Of these options, 15,000 equity stock options remain outstanding as on 31st March, 2012.

(C) The Remuneration/Compensation Committee at its meeting held on 28th April, 2011 - Granted 20,000 equity stock options to an eligible employee with an option for one equity share of Rs. 8 each at an exercise price of Rs. 80 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005.

Of these options, 20,000 equity stock options remain outstanding as on 31st March, 2012.

(D) The Remuneration/Compensation Committee at its meeting held on 19th August, 2011 -

Granted 30,000 equity stock options to eligible employees with an option for one equity share of Rs. 8 each at an exercise price of Rs. 76 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005.

Of these options, 25,000 equity stock options remain outstanding as on 31st March, 2012 and the remaining equity stock options have lapsed.

The company has used intrinsic value method to account for the cost of stock options to employees and a director of the company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. In view of the exercise price being higher than the closing market price on the day prior to the date of grant, the intrinsic value of the option is Nil. Consequently, the accounting value of the option (compensation cost) is also Nil.

The weighted average fair value of each stock option on the date of its grant is Rs. 41.34, which has been vetted by an independent valuer. This fair value has been calculated using Black-Schools Option Pricing Model. The inputs used for this calculation are

(i) Average Share Price: Rs. 91.33 on the date of grant (ii) Average Exercise Price: Rs. 90.70 (iii) Average Expected Volatility: 47.98% (iv) Average Option Life: 8 years (v) Average Expected Dividend Yield: 3.50%, and (vi) Average Risk Free Interest Rate: 8.08%. The daily volatility of the company's shares on the National Stock Exchange over a period of time prior to the date of grant, corresponding with the expected life of the options, has also been considered for determining the fair value.

Notes:

(a) Consumption of Raw and Packing Materials includes consumption by third parties under contract with the company and consumption in respect of physician samples.

(b) Components and spare parts referred to in Paragraph (viii)(c) of Additional Information (Paragraph 5) under General Instructions for Preparation of Statement of Profit and Loss in Part II of Revised Schedule VI of the Act are assumed to be those forming part of the finished goods produced and not those used for maintenance of plant and machinery.

4. Forward Contracts and Unheeded Foreign Currency Outstanding Balances

The company uses forward contracts to hedge its risks of net exposure associated with foreign currency fluctuations. The company does not enter into any forward contract which is intended for trading or speculative purposes.

Notes:

(a) The primary reporting of the company is based on the business segment. The company has only one reportable business segment which is manufacturing and marketing of pharmaceutical products. Accordingly, the figures appearing in these financial statements relate to pharmaceutical products.

(b) Secondary segment reporting is based on the geographical location of customers. Revenue is segregated in to two segments namely India and Other Countries for the purpose of reporting geographical segments.

(c) The accounting policies adopted for segment reporting are in line with the accounting policies adopted for the preparation of financial statements as disclosed in Note 2.

5. Earnings per Share

Basic earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year. Diluted earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year and also the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. Dilutive potential equity shares that have been converted in to equity shares during the year are included in the calculation of diluted earnings per share from the beginning of the year to the date of conversion and from the date of conversion, the resulting equity shares are included in computing both basic and diluted earnings per share. Earnings per Share has been computed as under:

6. The financial statements for the year ended 31st March, 2011 were prepared as per the then applicable, pre-revised Schedule VI to the Act. Consequent to the notification of Revised Schedule VI under the Act, the financial statements for the year ended 31st March, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2011

1. Background

RPG Life Sciences Limited (the company) was incorporated on 29th March, 2007 as RPG Pharmaceuticals Limited. The name of the company was subsequently changed to RPG Life Sciences Limited on 13th February, 2008.

Pursuant to a Scheme of Arrangement, the company has acquired the pharmaceuticals business of Brabourne Enterprises Limited (formerly RPG Life Sciences Limited) with retrospective effect from the appointed date of 2nd April, 2007.

2. During the year 2008-2009, the company had raised amounts aggregating to Rs. 12,668(000) by way of allotment of 2,138,000 share warrants on preferential basis with an option to apply for one equity share of the face value of Rs. 8 each for cash at a premium of Rs. 15.70 per share against each share warrant held, to be exercised within a period not exceeding eighteen months from the date of allotment in respect of the aforesaid share warrants. In accordance with the terms of issue of the share warrants, the company had received Rs. 12,668(000) being 25% of the price of warrants.

Of the above warrants allotted, 700,000 warrants were converted during the previous year in to equity shares of Rs. 8 each fully paid-up at a premium of Rs. 15.70 each. In accordance with the terms of conversion, the company had received Rs. 12,442(000) during the previous year.

During the year, the balance 1,438,000 warrants have been converted in to equity shares of Rs. 8 each fully paid-up at a premium of Rs. 15.70 each. In accordance with the terms of conversion, the company has received Rs. 25,561(000) during the year.

The above amounts received aggregating to Rs. 50,671(000) have been utilised towards repayment of term loan of Rs. 7,670(000), payment of interest on term loan of Rs. 1,064(000) and repayment of working capital loan of Rs. 41,937(000).

3. Pursuant to a special resolution passed by the Shareholders at the Annual General Meeting held on 27th August, 2008, the company adopted the Employee Stock Option Scheme titled 2005 Employee Stock Option Plan (ESOP 2005) for employees and directors of the company including those employees and directors who were to be granted options, pursuant to the Scheme of Arrangement sanctioned by the Honble High Court of Judicature at Bombay on 14th December, 2007, in lieu of options that were granted by Brabourne Enterprises Limited (the transferor company) under its ESOP 2005. The total number of equity shares reserved under the said plan is 250,000 equity shares of Rs. 8 each.

The Remuneration/Compensation Committee at its meeting held on 6th August, 2010 -

(a) Granted and vested 30,119 equity stock options to employees, in lieu of options that were granted to them by Brabourne Enterprises Limited. The employee had an option to apply for one equity share of Rs. 8 each at an exercise price of Rs. 32.06.

Of these options, 28,391 equity stock options have been exercised and 1,728 options remain outstanding as on 31st March, 2011.

(b) Granted 95,000 equity stock options to the eligible director and employees of the company, with an option for one equity share of Rs. 8 each at an exercise price of Rs. 100 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005.

Of these options, 95,000 equity stock options remain outstanding as on 31st March, 2011.

Further, the Remuneration/Compensation Committee at its meeting held on 20th October, 2010 granted 15,000 equity stock options to an eligible employee with an option for one equity share of Rs. 8 each at an exercise price of Rs. 104 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee.

Of these options, 15,000 equity stock options remain outstanding as on 31st March, 2011.

The company has used intrinsic value method to account for the cost of stock options to employees and a director of the company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. In view of the exercise price being higher than the closing market price on the day prior to the date of grant, the intrinsic value of the option is Nil. Consequently, the accounting value of the option (compensation cost) is also Nil.

The weighted average fair value of each stock option on the date of its grant is Rs. 44.54, which has been vetted by an independent valuer. This fair value has been calculated using Black-Scholes Option Pricing Model. The inputs used for this calculation are (i) Average Share Price: Rs. 100.48 on the date of grant (ii) Exercise Price: Rs. 100.55 (iii) Expected Volatility: 39.51% (iv) Option Life: 8 years (v) Expected Dividend Yield: 3.66%, and (vi) Average Risk Free Interest Rate: 7.96%. The daily volatility of the companys shares on the National Stock Exchange over a period of time prior to the date of grant, corresponding with the expected life of the options, has also been considered for determining the fair value.

4. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 6,195(000) [Previous year Rs. 28,046(000)].

As at As at 31st March, 2011 31st March, 2010 Rs. 000 Rs. 000

5. Contingent Liabilities

(a) Claims against the company not acknowledged as debts

(i) Sales tax matters 11,804 11,804

(ii) Excise matters 7,190 6,165

(iii) Water Charges — 789

(b) Guarantee given to Gujarat Industrial Development Corporation 1,546 1,546

(c) Bank guarantees given to third parties 4,601 7,989

Notes:

(i) Future cash outflows in respect of (a)(i) and (ii) above are determinable only on receipt of judgments/decisions pending with various authorities/forums and/or final outcome of the matters.

(ii) The management is of opinion that there will be no impact on future cash outflow of the company in respect of (b) and (c) above.

6. There are no delayed payments to Micro and Small Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 during the year. Further, there are no dues to such parties which are outstanding as at the Balance Sheet date. This information has been determined on the basis of information available with the company. This has been relied upon by the auditors.

7. The company uses forward contracts to hedge its risks of net exposure associated with foreign currency fluctuations. The company does not enter into any forward contract which is intended for trading or speculative purposes.

8. Employee Benefits

The company has classified various employee benefits as under:

(C) Other Long-term Employee Benefits

The liabilities for Leave Encashment and Compensated Absences as at the Balance Sheet date were Rs. 10,341(000) [Previous year Rs. 8,600(000)] and Rs. 8,737(000) [Previous year Rs. 8,553(000)] respectively.

9. Segment Information

Notes:

(a) The primary reporting of the company is based on the business segment. The company has only one reportable business segment which is manufacturing and marketing of pharmaceutical products. Accordingly, the figures appearing in these financial statements relate to pharmaceutical products.

(b) Secondary segment reporting is based on the geographical location of customers. Revenue is segregated in to two segments namely India and Other Countries for the purpose of reporting geographical segments.

(c) The accounting policies adopted for segment reporting are in line with the accounting policies adopted for the preparation of financial statements as disclosed in Note 2 above.

10. Related Party Disclosures

Related parties with whom the company had transactions during the year

Key Management Personnel Arvind Vasudeva (up to 9th April, 2010)

Ajit Singh Chouhan (from 9th April, 2010)

11. Previous year figures have been regrouped where necessary.


Mar 31, 2010

1. Background

RPG Life Sciences Limited (the company) was incorporated on 29th March, 2007 as RPG Pharmaceuticals Limited. The name of the company was subsequently changed to RPG Life Sciences Limited on 13th February, 2008.

Pursuant to a Scheme of Arrangement, the company acquired the pharmaceuticals business of Brabourne Enterprises Limited (formerly RPG Life Sciences Limited) with retrospective effect from the appointed date of 2nd April, 2007.

2. During the previous year, the company had raised amounts aggregating to Rs. 12,668(000) by way of allotment of 2,138,000 share warrants on preferential basis with an option to apply for one equity share of the face value of Rs. 8 each for cash at a premium of Rs. 15.70 per share against each share warrant held, to be exercised within a period not exceeding eighteen months from the date of allotment in respect of the aforesaid share warrants. In accordance with the terms of issue of the share warrants, the company had received Rs. 12,668(000) being 25% of the price of warrants.

Of the above warrants allotted, 700,000 warrants have been converted during the year in to equity shares of Rs. 8 each fully paid-up at a premium of Rs. 15.70 each. In accordance with the terms of conversion, the company has received Rs. 12,442(000) during the year.

The above amounts received aggregating to Rs. 25,110(000) have been utilised towards repayment of term loan of Rs. 7,670(000), payment of interest on term loan of Rs. 1,064(000) and repayment of working capital loan of Rs. 16,376(000).

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 28,046(000) [Previous year Rs. 61(000)].

As at As at 31st March, 2010 31st March, 2009 Rs. 000 Rs. 000

4. Contingent Liabilities

(a) Claims against the company not acknowledged as debts

(i) Sales tax matters 11,804 11,804

(ii) Excise matters 15,165 6,165

(iii) Water charges 789 761

(b) Guarantee given to Gujarat Industrial

Development Corporation 1,546 1,546

(c) Bank guarantees given to third parties 7,989 2,902

Notes:

(i) Future cash outflows in respect of (a)(i) and (ii) above are determinable only on receipt of judgments/decisions pending with various authorities/forums and/or final outcome of the matters.

(ii) The management is of opinion that there will be no impact on future cash outflow of the company in respect of (a)(iii), (b) and (c) above.

5. The company uses forward contracts to hedge its risks of net exposure associated with foreign currency fluctuations. The company does not enter into any forward contract which is intended for trading or speculative purposes.

6. Related Party Disclosures

Related Party with whom the company had transactions during the year Key Management Person Arvind Vasudeva

7. Previous year figures have been regrouped where necessary.

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