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Notes to Accounts of Sequent Scientific Ltd.

Mar 31, 2016

Notes:

(i) During the year, based on the shareholder''s approval one equity share of Rs. 10 each is sub-divided into 5 equity shares of Rs. 2 each with effect from February 26, 2016.

Note:

(a) Conversion of Warrants:

Current Year:

1. Conversion of 2,000,000 warrants issued during the year 2014-15 on preferential basis at a conversion price ofRs. 222.15 per equity share of the Company as approved in the Extra Ordinary General Meeting dated May 21, 2014.

2. 3,000,000 warrants on preferential basis at a conversion price ofRs. 236 per equity share of the Company as approved in the Extra Ordinary General Meeting dated July 1, 2014.

3. 1,100,000 warrants at a conversion price ofRs. 475 per equity share of the Company as approved in the Extra Ordinary General Meeting dated March 31, 2015.

Previous Year:

Conversion of 3,150,000 warrants issued on preferential basis at a conversion price of Rs. 135.25 per equity share of the Company as approved in the Extra Ordinary General Meeting dated January 14, 2014.

(b) The Company on May 26, 2015 issued 7,476,635 equity shares ofRs. 10 each at a price of Rs. 535 per equity share to Qualified Institutional Buyers.

(c) During the year, the Company issued on a preferential basis to promoter group entities and non- promoter group entities 757,734 and 2,827,679 equity shares of Rs. 10 each respectively at a price ofRs. 669.10 per share for consideration other than cash.

(iii) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value ofRs. 2 per share (Previous year Rs. 10 per share (Refer note (i) above)). Each holder of equity shares is entitled to one vote per share. Each equity shareholder is entitled to dividend in the Company. The dividend is proposed by the Board of Directors and is subject to the approval of the shareholders in the ensuing Annual General Meeting, except interim dividend.

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, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

The amount of dividend per share recognized as distributions to equity shareholders is Nil (31 March 2015 : Rs. Nil)

(v) 2,320,000 shares (31 March, 2015 582,500 shares of Rs. 10 each) of Rs. 2 each (Refer note

(i) above) are reserved towards outstanding employee stock options granted / available for grant. (Refer Note 29)

(vi) As at 31 March 2016, 5,500,000 warrants (31 March 2015: 5,000,000 of Rs. 10 each) of Rs.2 each (Refer note (i) above) are outstanding to be converted into equivalent number of shares. (Refer Note 27.1)

(vii) Aggregate number of shares allotted as fully paid pursuant to contract without payment of cash for a period of 5 years immediately preceding the Balance Sheet date:

The interest on above term loans from other parties are linked to the respective lender''s base rates which are floating in nature. As of 31 March 2016 the interest rates ranges from 12.7% to 13.1% per annum.

(i) Working capital loan from banks are secured by a first pari-passu charge on current assets of the Company and a second pari-passu charge on fixed assets of the Company as a collateral.

(ii) Short-term borrowings of Rs.Nil (31 March 2015 Rs.468.04 million) are guaranteed by some of the Promoters of the Company in their personal capacities.

(iii) The Company has not defaulted in repayment of loans and interest.

(iv) Unsecured short-term borrowings of Rs.Nil (31 March 2015 Rs.999.55 million) are secured against securities provided by entities owned by Promoters.

(a) During the previous year, pursuant to Order of Honourable High Court of Karnataka, the Share Capital of Sequent Penems Private Limited reduced from 8,076,653 to 4,038,327 shares of Rs.10 each. Consequently, proportionate investment value in Sequent Penems Private Limited is reduced from Rs. 402.83 Millions to Rs. 201.40 Millions and amount written off is included under exceptional items (Refer note 26)

(b) During the year, the Company converted 7,100,000 warrants to equal number of equity shares of Rs. 2 each. With this conversion, the Company had 10,600,000 equity shares of Shasun Pharmaceuticals Limited. Subsequently, pursuant to Scheme of Amalgamation between Strides Arcolab Limited and Shasun Pharmaceuticals Limited, the Company has received 3,312,500 equity shares of Rs. 10 each in the amalgamated entity (Strides Shasun Limited) in lieu of 10,600,000 shares of Shasun Pharmaceuticals Limited.

(c) Trade investment in equity instruments of other entities includes Nil (31 March 2015: Rs.195.25 Million) investment made in Shasun Pharmaceuticals Limited towards 25% of amount paid for subscription of 7,100,000 of warrants at a price of Rs. 110 per warrant. Each warrant is convertible into one equity share of face value of Rs. 2 each on payment of balance subscription amount of Rs.585.75 Million on or before 28 November 2015. The Company has converted the warrants to equivalent number of equity shares during the year. (Also refer note (b) above).

provisions, if any of the Companies Act, 2013, at a conversion price of Rs.222.15/per equity share of the Company including a premium of Rs. 212.15/- per equity share, arrived at in accordance with the SEBI Guidelines in this regard and the application money amounting to Rs. 111.08 Million was received from the allottees. As on March 31, 2015 all the warrants were outstanding.

The balance application money as at March 31, 2015 amounting to Rs.111.08 Million represents money received against 2,000,000 warrants.

b) The Board of Directors of the Company further by circular resolution on July 11, 2014 pursuant to the approval given by the members of the Company at their Extraordinary General Meeting held on July 1, 2014 had resolved to create, offer, issue and allot up to 3,000,000 warrants to promoter group entities, convertible into 3,000,000 equity shares of Rs.10/- each on a preferential allotment basis, pursuant to Sections 62(1) (c), 42 and other applicable provisions, if any of the Companies Act, 2013, at a conversion price of Rs.236/- per equity share of the Company including a premium of Rs. 226/- per equity share, arrived at in accordance with the SEBI Guidelines in this regard and the application money amounting to Rs. 177 Million was received from the allottees. As on March 31, 2015 all the warrants were outstanding.

The balance application money as at March 31, 2015 amounting to Rs.177 Million represents money received against 3,000,000 warrants.

NOTE 27 ADDITIONAL INFORMATION TO THE FINANCIAL STATEMENTS

4 Money received against share warrants

Current year:

a) The Board of Directors of the Company on 11 April 2015 and 13 April 2015 pursuant to the approval given by the members of the Company at their Extraordinary General Meeting held on 31 March 2015 had resolved to create, offer, issue and allot up to 1,100,000 warrants to promoter group entities, convertible into 1,100,000 equity shares of Rs.10/- each and 1,100,000 warrants to non-promoter, convertible into 1,100,000 equity shares of Rs.10/- each respectively, on a preferential allotment basis, pursuant to Sections 62(1) (c), 42 and other applicable provisions, if any of the Companies Act, 2013, at a conversion price of Rs.475/- per equity share of the Company including a premium of Rs. 465/- per equity share, arrived at in accordance with the SEBI Guidelines in this regard and the application money amounting to Rs. 261.25 Million was received from the allotters. Out of the above, 1,100,000 warrants issued to non-promoters have been converted into equivalent number of equity shares on 10 June 2015. As on 31 March 2016, 1,100,000 warrants were outstanding.

The balance application money as at 31 March 2016 amounting to Rs.130.63 Million represents money received against 1,100,000 warrants (after subdivision 5,500,000 warrants) (Refer Note 2(i)).

b) The warrants may be converted into equivalent number of shares on payment of the balance amount at any time on or before 11 October 2016. In the event the warrants are not converted into shares within the said period, the Company is eligible to forfeit the amounts received towards the warrants.

The Company has sufficient authorized capital to cover the allotment of these shares.

Previous year:

a) The Board of Directors of the Company on May 28, 2014 at its Board meeting pursuant to the approval given by the members of the Company at their Extraordinary General Meeting held on May 21, 2014 had resolved to create, offer, issue and allot up to 2,000,000 warrants to promoter group entities, convertible into 2,000,000 equity shares of Rs.10/- each on a preferential allotment basis, pursuant to Sections 62(1) (c), 42 and other applicable

* Outflow, if any, arising out of the said claim including interest, if any, would depend on the outcome of the decision of the Appellate Authority and the Company''s right for future appeal before the judiciary.

** Outflow, if any, would depend on party not honoring the bill on due date and the Company''s further legal right.

Note

(a) The Company has given a corporate guarantee to Export and Import Bank of India towards a credit facility availed by its subsidiary (Alivira Animal Health Limited) amounting to '' 1,250 Million. (31 March 2015 - '' 1,250 Million). Outstanding balance as on 31 March 2016 is '' 1,237.50 Million (31 March 2015 -'' 1,237.50 Million).

(b) The Company has given a corporate guarantee to RBL Bank Limited towards a credit facility availed by its subsidiary (Alivira Animal Health Limited) amounting to Rs. 1,350 Million (31 March 2015 - Rs. 649.7 Million). Outstanding balance as on 31 March 2016 is Rs.189.95 Million (31 March 2015 - Rs. 295.10 Million).

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management based on enquiries made by the Management with the creditors which have been relied upon by the auditors.

5 Details on derivatives instruments and unheeded foreign currency exposures

(i) Outstanding forward exchange contracts entered into by the Company as on 31 March 2016 Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company has fully depreciated the carrying value of assets, net of residual value, where the remaining useful life of the asset was determined to be nil as on 1 April 2014, and has adjusted an amount of Rs.4.40 Million against the Surplus/(Deficit) in Statement of Profit and Loss as on 1 April 2014 under Reserves and Surplus (Refer note 3(e)).

The depreciation expense in the Statement of Profit and Loss for the year ended 31 March 2015 is higher by Rs. 3.45 Million consequent to the change in the useful life of the assets.

6. The Company has issued equity shares amounting to Rs. 4,000.00 million through Qualified Institutional Placement for purposes of meeting long term funding requirements including investments, capital expenditure and general business requirements. As at 31 March, 2016, an amount of Rs. 585.00 million (31 March, 2015 Rs. Nil) is temporarily invested in short term mutual funds, pending utilization.

7 Employee benefit plans

8.a Defined contribution plans

The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs. 17.78 Million (Year ended 31 March 2015 - Rs. 19.26 Million) for Provident Fund contributions and Rs. 1.25 Million (Year ended 31 March 2015 - Rs. 1.45 Million) for Employee State Insurance Scheme contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

9.b Defined benefit plans

The Company has a defined Gratuity benefit plan. The following table summarizes the components of net employee benefit expenses recognized in the Statement of Profit and Loss and the funded status and amounts recognized in the Balance Sheet for the plan.

Notes

1. The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations.

2. The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.

3. The Company''s best estimate, as soon as it can reasonably be determined, of contributions expected to be paid to the plan during the annual period beginning after Balance Sheet date is Rs. 1.00 Million (31 March 2015 - Rs. Nil)

4. Expected rate of return on plan assets is determined after considering several applicable factors such as the composition of plan assets, investment strategy, market scenario, etc

Composition of the plan assets is as follows:

The details with respect to the investment made by Fund managers (LIC and SBI Life) into major categories of plan assets have not been disclosed, as the same has not been provided by the Fund managers to the Company.

Notes

1. The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations.

2. The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.

10. Related Party Disclosures:

A List of related parties:

i) Wholly-owned subsidiaries:

Alivira Animal Health Limited, India (Refer Note 2 below)

Alivira Animal Health Limited, Ireland (step-down subsidiary)

Alivira Animal Health Australia Pty Limited (step-down subsidiary) (Refer Note

3 below

SeQuent Global Holdings Limited

SeQuent European Holdings Limited (step-down subsidiary)

SeQuent Research Limited SeQuent Antibiotics Private Limited

SeQuent Pharmaceuticals Private Limited (Formerly Sequent Oncolytics Private Limited

Elysian Life Sciences Private Limited

Sequent Scientific Pte Limited (Refer Note 4 below)

ii) Other subsidiaries:

SeQuent Penems Private Limited

Indo Phyto Chemicals Private Limited (Refer note 5 below)

Step down subsidiaries:

Provet Veteriner Urunleri San. ve Tic. A.S.

Fendigo SA (Refer Note 6 below)

Fendigo BV (Refer Note 6 below)

N-Vet AB (Refer Note 6 below)

Topkim Ilag Premiks San. ve Tic. A.S (Refer Note 7 below)

iii) Key Management Personnel

Mr. Manish Gupta, Chief Executive Officer & Managing Director Dr. Gautam Kumar Das, Joint Managing Director Mr. P R Kannan, Chief Financial Officer

iv) Enterprises owned or significantly influenced by individuals who have control/ significant influence over the Company:

Strides Shasun Limited (Formerly known as Strides Arcolab Limited)

Atma Projects

Agnus Holdings Private Limited Latitude Projects Private Limited Chayadeep Properties Private Limited Deesha Properties Agnus Capital LLP Chayadeep Ventures LLP Pronomz Ventures LLP

Note:

1 Related parties are as identified by the Company and relied upon by the Auditors.

2 The shareholding of Alivira Animal Health Limited as at March 31, 2016 is 100% as compared to 91.92% in the previous year.

3 Alivira Animal Health Australia Pty Limited was incorporated on 24 July

2015.

4 Sequent Scientific Pte Limited, Singapore was incorporated on 4 February

2016.

5 Sequent Scientific Limited acquired 51% shareholding in Indo Phyto Chemicals Private Limited on 27 January 2016.

6 Alivira Animal Health Limited, Ireland acquired 85% shareholding each in Fendigo SA, Belgium, Fendigo BV, Netherlands and N-Vet AB, Sweden on 1 October 2015.

7 Provet Veteriner Urunleri San. ve Tic. A.S. acquired 100% shareholding in Topkim Ilag Premiks San. ve Tic. A.S on 11 December 2015.


Mar 31, 2014

SHARE CAPITAL

(i) Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the reporting year:

Note:

a) Conversion of 2,750,000 warrants issued during the year 2012-13 on preferential basis at a conversion price of Rs. 172.00 per equity share of the company as approved in the Extra Ordinary General Meeting dated 20 March 2013 and 550,00C warrants issued during the year 2013-14 on preferential basis at a conversion price of Rs. 135.25 per equity share of the company as approved in the Extra Ordinary General Meeting dated 14 January 2014.

(During the previous year conversion of 2,100,000 warrants issued on preferential basis at a conversion price of Rs. 120.75 per equity share of the company as approved in the Annual General Meeting dated 26 September 2012).

(ii) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. Each equity shareholder is entitled to dividend in the Company. The dividend is proposed by the Board of Directors and is subject to the approval of the shareholders in the ensuing Annual General Meeting, except interim dividend.

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, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

The amount of dividend per share recognised as distributions to equity shareholders is Nil (31 March 2013 : Rs. Nil)

(iv) 700,000 shares (As at 31 March, 2013 700,000 shares) of Rs. 10 each are reserved towards outstanding employee stock options granted / available for grant. (Refer Note 30)

(v) As at 31 March 2014 3,150,000 warrants (31 March 2013: 2,750,000) of Rs. 10 each are outstanding to be converted into equivalent number of share. (Refer Note 28.1)

SHORT-TERM BORROWINGS

(i) Working capital loan from banks are secured by a first pari-passu charge on current assets of the Company and a second pari-passu charge on fixed assets of the Company as a collateral.

(ii) Short-term borrowings of Rs. 728.45 million (31 March 2013 Rs. 1,044.84 million) are guaranteed by some of the Directors of the Company in their personal capacities.

(iii) The Company has not defaulted in repayment of loans and interest.

(iv) Unsecured short-term borrowings of Rs. 1,200 million (31 March 2013 Rs. Nil) are secured against securities provided by entities owned by Promoters.

Money received against share warrants

The Board of Directors of the Company by circular resolution dated 28 January 2014 and as approved at its Extra-ordinary General Meeting held on 14 January 2014 have resolved to create, offer, issue and allot up to 3,700,000 warrants, convertible into 3,700,000 equity shares of Rs. 10/- each on a preferential allotment basis, pursuant tc Section 81(1A) of the Companies Act, 1956, at a conversion price of Rs. 135.25/- per equity share of the Company, arrived at in accordance with the SEBI Guidelines in this regard and the application money amounting to Rs. 125.10 Million was received from them. Out of this 550,000 warrants are convertered and shares are issued during the year. The balance application money as at 31 March, 2014 amounting to Rs. 106.51 Million represents money received against Rs. 3,150,000 warrants.

The warrants may be converted into equivalent number of shares on payment of the balance amount at any time on or before 28 July 2015. In the event the warrants are not converted into shares within the said period, the Company is eligible to forfeit the amounts received towards the warrants. The Company has sufficient authorised capital to cover the allotment of these shares.

Contingent liabilities and commitments

(I) CONTINGENT LIABILITIES

(Rs. In Million) Particulars As at As at 31 March 2014 31 March 2013

(a) Claims against the Company not acknowledged as debts

Sales tax / Value added tax* 16.52 16.52 Income tax* 53.50 32.87 Service tax* 0.32 0.32 Excise duty* 9.08 8.47

(b) Guarantees

Guarantees to banks and financial 500.00 303.45 institutions against credit facilities extended to subsidiaries (Refer note below)

(c) Other money for which the Company is contingently liable

Bills receivables discounted with banks 353.51 133.90

* Outflow, if any, arising out of the said claim would depend on the outcome of the decision of the appellate authority and the Company''s right for future appeal before the judiciary.

Note

(a) The Company had given a corporate guarantee to Triodos Sustainable Trade Fund towards a credit facility availed by its stepdown subsidiary (Vedic Fanxipang Pharma Chemic Company Ltd) amounting to USD 1.30 Million. During the year the same has been encashed by said fund and the balance outstanding amount of USD 0.23 Millions (INR 147.80 lakhs) has been paid by the Company. Outstanding balance as on 31 March 2014 is Rs. Nil (31 March 2013 Rs. 21.22 Million).

(b) The Company had given a corporate guarantee to Stichting Triodos Sustainable Trade Fund towards a credit facility availed by its stepdown subsidiary (Elysian Life Sciences (Mauritius) Limited) amounting to USD 1.95 Million. During the year, the loan has been repaid. Outstanding balance as on 31 March 2014 is Rs. Nil (31 March 2013 64.27 Million).

(c) the Company had given a corporate guarantee to State Bank of Hyderabad and State Bank of travancore towards a credit facility availed by its subsidiary (Sequent penems private Limited) amounting to Rs. 900 Million (previous Year Rs. 900 Million). Outstanding balance as on 31 March 2014 is Rs. 228.65 Million (31 March 2013 Rs. 217.96 Million). during the year, the same has been provided by the Company and shown under exceptional items under Note 27.

(d) the Company has given a corporate guarantee to export and Import Bank of India towards a credit facility availed by its subsidiary (Alivira Animal Health Limited) amounting to Rs. 1,250 Million. (previous Year Rs. nil). Outstanding balance as on 31 March 2014 is Rs. 500 Million (31 March 2013 Rs. nil).

Managerial Remuneration

Based on the revised approval received from the Central Government during the year, the Company has recovered excess salaries and allowances paid to its directors in the earlier years of ` 26.81 Million (Previous year ` NIL Million) and recognised it in the statement of profit and loss.

Employee benefit plans

A. DEFINED CONTRIBUTION PLANS

The Company makes provident Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 25.01 Million (Year ended 31 March 2013 Rs. 20.18 Million) for Provident Fund contributions and Rs. 1.54 Million (Year ended 31 March 2013 Rs. 2.01 Million) for Employee State Insurance Scheme contributions in the Statement of profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

B. DEFINED BENEFIT PLANS

Notes

1. The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations.

2. The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.

3. The Company''s best estimate, as soon as it can reasonably be determined, of contributions expected to be paid to the plan during the annual period beginning after balance sheet date is Rs. Nil (31 March, 2013 Rs. Nil)

C. Notes

1. The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations.

2. The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.

Related Party Disclosures:

A LIST OF RELATED PARTIES;

i) Wholly-owned subsidiaries;

SeQuent Global Holdings Limited

SeQuent European Holdings Limited (step-down subsidiary)

SeQuent Research Limited

SeQuent Antibiotics private Limited

SeQuent Oncolytics private Limited

Elysian Life Sciences private Limited (Refer Note 1)

Alvira Animal Health Limited (Refer Note 2)

ii) Other subsidiaries;

Galenica B.V.

Codiffar N.V. (wholly Owned Subsidiary of Galenica B.V.)

Elysian Health Care private Limited (wholly owned subsidiary of Elysian Life Sciences private Limited till 31 March 2013) (Refer Note 3)

Vedic Fanxipang pharma Chemic Company Limited (wholly owned subsidiary of Elysian Life Sciences private Limited)

Elysian Life Sciences Mauritius Limited (step-down subsidiary)

SEQUENT Penems Private Limited

iii) Key Management Personnel

Mr. K.R.Ravishankar, Director Dr. Gautam Kumar Das, Joint Managing Director

iv) Enterprises owned or significantly influenced by key management personnel and relative of key management personnel;

Strides Arcolab Limited

Atma projects

Agnus Holdings private Limited

Latitude projects pvt. Limited

Chayadeep properties private Limited

Desha properties

Agnus Capital LLP

Chayadeep Ventures LLP

Pronomz Ventures LLP

Note:

1 On 31 March 2013, the Company purchased additional shares in Elysian Life Sciences private Limited, resulting in it becoming a wholly owned subsidiary.

2 Alvira Animal Health Limited was incorporated on 30 September 2013.

3 On 31 March 2013, Elysian Life Sciences private Limited sold its entire shareholding of Elysian Health Care private Limited.

4 Related parties are as identified by the Company and relied upon by the Auditors.

Discontinuing operations

a. During the year, the Board of Directors of the Company have approved the transfer of Specialty Chemicals Division of the Company along with all related assets and liabilities by way of slump sale. The Specialty Chemicals Division is reported as part of the Specialty Chemicals segment of the Company as part of Segment disclosure presented in the Consolidated Financial Statements. Subsequent to the year end requisite approval from the shareholders as per the provisions of Section 180(1)(a) of the Companies Act, 2013 has been obtained through postal ballot. The transfer of the Specialty Chemicals division is expected to be completed in 2nd Quarter of financial year 2014-15.

b. During the year, the Board of Directors of the Company and the Shareholders have approved the transfer of Veterinary Formulations Division of the Company along with all related assets and liabilities by way of slump sale to Alivira Animal Health Limited, a wholly owned subsidiary of the Company. The Veterinary Formulations business is reported as part of the Pharmaceuticals segment of the Company. The transfer of the Veterinary Formulations division is expected to be completed in 3rd Quarter of financial year 2014-15.

DISCLOSURES ON EMPLOYEE SHARE BASED PAYMENTS

Employee Stock Option Scheme

a) In the extraordinary general meeting held on March 8, 2008, the shareholders approved the issue of 700,000 options under the ESOP scheme. In accordance with the above, the Company established an ESOP trust to administer the scheme on February 25, 2010.

On the board meeting dated March 29, 2010, the Company has allotted 700,000 equity shares to the ESOP trust with a Face value of Rs. 10 per share at a premium of Rs. 103 per share.

As per the scheme, the Compensation committee grants the options to the employee eligible. The exercise price and vesting period of each option shall be as decided by the compensation committee from time to time. The options granted would normally vest over a maximum period of 4 years from the date of the grant in proportions specified in the scheme. Options may be exercised with in period not exceeding 4 years from the date of first vesting of the options by the Company.

b) During the current year, the Compensation Committee in its meeting held on May 30, 2013 and February 12, 2014 has granted 540,000 and 100,000 options respectively under Sequent Scientific Employees Stock Option Plan - 2010 (Sequent ESOP 2010) to certain eligible employees of the Company. The options allotted under Sequent Scientific Employees Stock Option Plan - 2010 (Sequent ESOP 2010) are convertible into equal number of equity shares.

The vesting period of these options range over a period of 1 to 4 years. The options may be exercised within a period of 1 to 4 years from the date of vesting.

TRANSFER PRICING

In respect of Transfer pricing regulations under Section 92 to 92F of the Indian Income Tax Act, 1961, the Management confirms that its international transactions and Specified Domestic Transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for tax.

NOTE

The Company has not received a written representation from Mr. K.R.Ravishankar, one of the director of the Company as on March 31, 2014, confirming that he is not disqualified from being appointed as a director of the Company in terms of Section 274(1)(g) of the Companies Act, 1956.

NOTE

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure. Disclosure made under Note 28 to 32 reflects combined items pertaining to continuing and discontinuing operations.


Mar 31, 2013

1.1 Money received against share warrants

The Board of Directors of the Company by circular resolution dated 30 March 2013 and as approved at its Extra-ordinary General Meeting held on 20 March 2013 have resolved to create, offer, issue and allot up to 2,750,000 warrants, convertible into 2,750,000 equity shares of Rs.10/- each on a preferential allotment basis, pursuant to Section 81(1A) of the Companies Act, 1956, at a conversion price of Rs.172/- per equity share of the Company, arrived at in accordance with the SEBI Guidelines in this regard and the application money amounting to Rs. 118.79 Million was received from them. The warrants may be converted into equivalent number of shares on payment of the balance amount at any time on or before 29 September 2014. In the event the warrants are not converted into shares within the said period, the Company is eligible to forfeit the amounts received towards the warrants.

1.2 Contingent liabilities and commitments

(Rs. In Million) As at 31 As at 31 March 2013 March 2012

i. CONTINGENT LIABILITIES

(a) Claims against the Company not acknowledged as debts

Sales tax / Value added tax * 16.52 16.68

Income tax * 32.87 2.08

Service tax * 0.32 0.16

Excise duty* 8.47 0.02

(b) Guarantees

Guarantees to banks and financial 303.45 260.71 institutions against credit facilities extended to subsidiaries (Refer note below)

(c) Other money for which the Company is contingently liable

Bills receivables discounted with banks 133.90 154.85

* Outflow, if any, arising out of the said claim would depend on the outcome of the decision of the appellate authority and the Company''s right for future appeal before the judiciary.

Note

(a) The Group has given a corporate guarantee to Triodos Sustainable Trade Fund towards a credit facility availed by its stepdown subsidiary (Vedic Fanxipang Pharma Chemic Company Ltd) amounting to USD 1.30 Million (Rs. 70.71 Million.) (Previous Year Rs. 66.50 Million). Outstanding balance as on 31 March 2013 is Rs. 21.22 Million ( 31 March 2012 Rs. 55.02 Million).

(b) The Group has given a corporate guarantee to Stichting Triodos Sustainable Trade Fund towards a credit facility availed by its stepdown subsidiary (Elysian Life Sciences (Mauritius) Limited) amounting to USD 1.95 Million (Rs.106.06 Million.) (Previous Year Rs. 99.76 Million). Outstanding balance as on 31 March 2013 is Rs. 64.27 Million ( 31 March 2012 Rs. 30.69 Million).

(c) The Company has given a corporate guarantee to State Bank of Hyderabad and State Bank of Travancore towards a credit facility availed by its subsidiary (Sequent Penems Private Limited) amounting to Rs. 900 Million. (Previous Year Rs. 900 Million). Outstanding balance as on 31 March 2013 is Rs. 217.96 Million ( 31 March 2012 Rs. 175 Million).

1.3 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management based on enquiries made by the Management with the creditors which have been relied upon by the auditors.

1.5 Details on derivatives instruments and unhedged foreign currency exposures

I. No derivative positions were open as at 31 March, 2013. Derviative transactions are undertaken to act as economic hedges for the Company''s exposures to various risks in foreign exchange markets and may / may not qualify or be designated as hedging instruments.

(a) Forward exchange contracts and options [being derivative instruments], which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(i) Outstanding forward exchange contracts entered into by the Company as on 31 March, 2013

1.6 Managerial Remuneration

Based on the approval received from the Central Government during the year and subsequent to the year-end, the Company has recognised in the Statement of Profit and Loss for the year ended 31 March 2013 Rs.27.70 Million of excess salaries and allowances paid to its directors and which was included under Short term loans and advances in the previous years.

2.1 Details of amalgamations

I. Amalgamation of Fraxis Life Sciences Limited with the Company:

During the previous year ended 31 March 2012, the Scheme of Amalgamation of Fraxis Life Sciences Limited ("Transferor Company”) with the Company ("Transferee Company”) was sanctioned by the High Court of Bombay on August 20, 2011 with the appointed date and effective date being September 14, 2011, the date on which the sanctioned Scheme is filed by the Company with the Registrar of Companies, Mumbai ("the Scheme”). In terms of the Scheme:

a) The amalgamation was accounted for under the Purchase Method of accounting as specified in Accounting Standard (AS) – 14 Accounting for Amalgamations, notified by the Central Government of India under the Companies (Accounting Standards) Rules, 2006.

b) All the assets and liabilities of the Transferor Company have been recorded by the Transferee Company at their respective carrying amounts as appearing in the books of the Transferor Company as on the appointed date.

c) The investment in the equity share capital of the Transferee Company as appearing in the books of accounts of the Transferor Company got cancelled and accordingly, the share capital of the Transferee Company was reduced to the extent of face value of shares held by the Transferor Company in the Transferee Company as on the appointed date.

d) The excess of the value of the net assets of the Transferor Company acquired by the Transferee Company over the face value of the shares issued by the Transferee Company as consideration to the shareholders of the Transferor Company and after adjusting for cancellation of equity share capital as mentioned in (c)above was treated as Capital Reserve amounting to NIL (net of merger expenses).

e) All costs, charges, taxes including duties, levies and all other expenses incurred in carrying out and implementing the Scheme and to put it into operation were adjusted against the Capital Reserve.

Details of assets and liabilities acquired on amalgamation and treatment of the difference between the net assets acquired and the face value of the shares issued by the Transferee Company as consideration to the shareholders of the Transferor Company and after adjusting for cancellation of equity share capital:

2.2. Related Party Disclosures

A List of related parties:

i) Holding Company:

Fraxis Life Sciences Limited (merged with the Company w.e.f September 14, 2011: Refer Note 28(1)(i))

ii) Wholly-owned subsidiaries: SeQuent Global Holdings Limited SeQuent European Holdings Limited (step-down subsidiary) SeQuent Research Limited SeQuent Antibiotics Private Limited SeQuent Oncolytics Private Limited Elysian Life Sciences Private Limited (Refer Note 1)

iii) Other subsidiaries: Galenica B.V.

Codiffar N.V. (wholly Owned Subsidiary of Galenica B.V.) Elysian Health Care Private Limited (Wholly owned Subsidiary of Elysian Life Sciences Pvt. Ltd. till 31st March 2013) (Refer Note 2) Vedic Fanxipang Pharma Chemic Company Limited (wholly owned subsidiary of Elysian Life Sciences Private Limited) Elysian Life Sciences Mauritius Limited (step-down subsidiary) Sanved Research Labs Private Limited (Refer Note 3) SeQuent Penems Private Limited (with effect from 15 March 2012)

iv) Key Management Personnel

Mr. K.R.Ravishankar, Managing Director and Chief Executive Officer

Dr. Gautam Kumar Das, Joint Managing Director

Mr. K.R.N.Moorthy, Deputy Managing Director (upto 23 January 2012)

v) Associate

SeQuent Penems Private Limited (till 15 March 2012)

vi) Enterprises owned or significantly influenced by key management personnel and relative of key management personnel: Strides Arcolab Limited Atma Projects

Agnus Holdings Private Limited Latitude Projects Pvt. Limited Chayadeep Properties Private Limited Agnus Capital LLP Chayadeep Ventures LLP

Note:

1. On 31 March 2013, the Company purchased additional shares in Elysian Life Sciences Private Limited resulting in it becoming a wholly owned subsidiary.

2. On 31 March 2013, Elysian Life Sciences Private Limited sold entire shareholding of Elysian Health Care Private Limited.

3. Sanved Research Labs Private Limited was struck off during the year ended 31 March 2012.

4. Related parties are as identified by the Company and relied upon by Auditors.

2.3. Details of leasing arrangements

The Company''s significant leasing arrangement is mainly in respect of factory building and office premises; the aggregate lease rent payable on these leasing arrangements charged to Statement of Profit and Loss is Rs.28.20 Million. (Previous Year: Rs. 12.80 Million)

The Company has entered in to non-cancelable lease arrangement for its facilities and office premises, the tenure of lease ranges from 1 year to 10 years. The said lease arrangements have an escalation clause where in lease rental is subject to an increment of ranging from 5% to 15%. Details of lease commitments are given below:

3 DISCLOSURES ON EMPLOYEE SHARE BASED PAYMENTS

a) In the extraordinary general meeting held on March 8, 2008, the shareholders approved the issue of 700,000 options under the ESOP scheme. In accordance with the above, the Company established an ESOP trust to administer the scheme on February 25, 2010.

On the board meeting dated March 29, 2010, the Company has allotted 700,000 equity shares to the ESOP trust with a Face value of Rs.10 per share at a premium of Rs. 103 per share.

As per the scheme, the Compensation committee grants the options to the employee deemed eligible. The exercise price and vesting period of each option shall be as decided by the compensation committee from time to time. The options granted would normally vest over a maximum period of 4 years from the date of the grant in proportions specified in the scheme. Options may be exercised with in period not exceeding 4 years from the date of first vesting of the options by the Company.

4 TRANSFER PRICING

In respect of Transfer pricing regulations under Section 92 to 92F of the Indian Income Tax Act, 1961, the Management confirms that its international transactions and Specified Domestic Transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for tax.

The Company has not received a written representation from Mr. K.R. Ravishankar,

5 one of the Director of the Company as on March 31, 2013, confirming that he is not disqualified from being appointed as a director of the Company in terms of Section 274 (1) (g) of the Companies Act, 1956. Previous year''s figures have been regrouped / reclassified wherever necessary to

6 correspond with the current year''s classification / disclosure.


Mar 31, 2012

1.1 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management based on enquiries made by the Management with the creditors which have been relied upon by the auditors.

1.2 Managerial Remuneration

Salaries and Allowances paid for the year ended March 31, 2012 excludes an amount of Rs. 12.9 million (Previous year: 14.80 million) for which the Company has filed for an approval with the Central Government . Pending such approval the excess amount so paid has been disclosed as dues from directors in Note 28.3.

1.3 Details of amalgamations

i. Amalgamation of Fraxis Life Sciences Limited with the Company:

The Scheme of Amalgamation of Fraxis Life Sciences Limited (Transferor Company) with the Company (Transferee Company) has been sanctioned by the High Court of Bombay on August 20, 2011 with the appointed date and effective date being September 14, 2011, the date on which the sanctioned Scheme is filed by the Company with the Registrar of Companies, Mumbai (the Scheme). In terms of the Scheme:

a) The amalgamation has been accounted for under the Purchase Method of accounting as specified in Accounting Standard (AS) – 14 Accounting for Amalgamations, notified by the Central Government of India under the Companies (Accounting Standards) Rules, 2006.

b) All the assets and liabilities of the Transferor Company have been recorded by the Transferee Company at their respective carrying amounts as appearing in the books of the Transferor Company as on the appointed date.

c) The investment in the equity share capital of the Transferee Company as appearing in the books of accounts of the Transferor Company stands cancelled and accordingly, the share capital of the Transferee Company shall stand reduced to the extent of face value of shares held by the Transferor Company in the Transferee Company as on the appointed date.

e) The excess of the value of the net assets of the Transferor Company acquired by the Transferee Company over the face value of the shares issued by the Transferee Company as consideration to the shareholders of the Transferor Company and after adjusting for cancellation of equity share capital as mentioned in (c)above is treated as Capital Reserve amounting to Rs. 6.48 Mio.

f) All costs, charges, taxes including duties, levies and all other expenses incurred in carrying out and implementing the Scheme and to put it into operation has been adjusted against the Capital Reserve. Details of assets and liabilities acquired on amalgamation and treatment of the difference between the net assets acquired and the face value of the shares issued by the Transferee Company as consideration to the shareholders of the Transferor Company and after adjusting for

iii. Amalgamation of Vedic Elements Private Limited with the Company:

During the year ended 31 March 2011, the Scheme of Amalgamation of Vedic elements Private Limited (Transferor Company) with the Company with an Appointed Date of 1 October, 2009 (the Scheme) was sanctioned by the High Court of Karnataka and came into effect on 7 September 2010. In terms of the

Scheme:

a. The amalgamation has been accounted for under the purchase method prescribed by Accounting Standard (AS) 14 - 'Accounting for Amalgamations' notified by the Central Government of India under the Companies (Accounting Standards) Rules, 2006 and accordingly value of assets and liabilities of the transferor Company have been recorded in the books based on values determined by the Board of Directors of the transferee Company.

b. The reserves and balances in profit and loss account of the Transferor Company has been recorded in the same form and at same values as they appear in the financial statements of the transferor Company as on the appointed date.

c. The carrying value of investments in the shares of the Transferor Company held by the Transferee Company and inter-corporate balances stand cancelled.

1.4.a Related Party Disclosures:

A List of related parties:

i) Holding Company:

Fraxis Life Sciences Limited (merged with the Company w.e.f September 14, 2011: Refer Note 28(1)(i))

ii) Wholly-owned subsidiaries:

Sequent Global Holdings Limited

Sequent European Holdings Limited (step-down subsidiary)

Sequent IPCO GmbH (step-down subsidiary up to 23rd February 2011)

Sequent Research Limited

Sequent Antibiotics Private Limited

Sequent Oncolytics Private Limited

iii) Other subsidiaries:

Galenica B.V.

Codiffar N.V. (wholly Owned Subsidiary of Galenica B.V.)

Elysian Life Sciences Private Limited (Refer Note 1)

Elysian Health Care Private Limited (wholly owned subsidiary of Elysian

Life Sciences Private Limited)

Vedic Fanxipang Pharma Chemic Company Limited (wholly owned

subsidiary of Elysian Life Sciences Private Limited)

Elysian Life Sciences Mauritius Limited (step-down subsidiary)

(Refer Note 2)

Sanved Research Labs Private Limited (Refer Note 3)

Sequent Penems Private Limited (with effect from 15 March 2012)

iv) Associates:

Sequent Penems Private Limited (till 14 March 2012)

v) Key Management Personnel

Mr. K.R.Ravishankar, Managing Director and Chief Executive Officer Dr. Gautam Kumar Das, Executive Director and Chief Operating Officer Mr. K.R.N.Moorthy, Deputy Managing Director (upto 23 January 2012)

vi) Enterprises owned or significantly influenced by key management personnel and relative of key management personnel:

Strides Acrolab Limited

ATMA Projects

Agnus Holdings Private Limited

Strides Italia SRL

Strides Arcolab (FA) Limited

Latitude Projects Pvt. Limited

Strides Vital Nigeria Limited

Paradime Infrastructure Development Company

Chayadeep Properties Private Limited

Note:

1 During the previous year the Company made additional investment resulting in Elysian Life Sciences Pvt. Ltd. becoming a subsidiary from associate.

2 Elysian Life Sciences Mauritius Limited was set up during the year

3 Sanved Research Labs Private Limited was struck off during the year

4 Related parties are as identified by the Company and relied upon by Auditors.

1.5 Details of leasing arrangements

The Company's significant leasing arrangement is mainly in respect of factory building and office premises; the aggregate lease rent payable on these leasing arrangements charged to Statement of Profit and Loss is Rs.12.80 Million. (Previous Year: Rs. 13.85 Million)

The Company has entered in to non-cancelable lease arrangement for its facilities and office premises, the tenure of lease ranges from 1 year to 10 years. The said lease arrangements have an escalation clause where in lease rental is subject to an increment of ranging from 5% to 15%. Details of lease commitments are given below:

Employee Stock Option Scheme

a) In the extraordinary general meeting held on March 8, 2008, the shareholders approved the issue of 700,000 options under the ESOP scheme. In accordance with the above, the Company established an ESOP trust to administer the scheme on February 25, 2010.

On the board meeting dated March 29, 2010, the Company has allotted 700,000 equity shares to the ESOP trust with a Face value of Rs.10 per share at a premium of Rs. 103 per share.

As per the scheme, the Compensation committee grants the options to the employee deemed eligible. The exercise price and vesting period of each option shall be as decided by the compensation committee from time to time. The options granted would normally vest over a maximum period of 4 years from the date of the grant in proportions specified in the scheme

Options may be exercised with in period not exceeding 4 years from the date of first vesting of the options by the Company.

2 PREVIOUS YEAR'S FIGURES

The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.


Mar 31, 2011

1. Amalgamation of Vedic Elements Private Limited with the Company:

The Scheme of Amalgamation of Vedic elements Private Limited ("Transferor Company") with the Company with an Appointed Date of 1 October, 2009 (the Scheme) has been sanctioned by the High Court of Karnataka and came into effect on 7 September 2010. In terms of the Scheme:

a. The amalgamation has been accounted for under the purchase method prescribed by Accounting Standard (AS) 14 – Accounting for Amalgamations notified by the Central Government of India under the Companies (Accounting Standards) Rules, 2006 and accordingly value of assets and liabilities of the transferor Company have been recorded in the books based on values determined by the Board of Directors of the transferee company.

b. The reserves and balances in profit and loss account of the Transferor Company has been recorded in the same form and at same values as they appear in the financial statements of the transferor Company as on the appointed date.

c. The carrying value of investments in the shares of the Transferor Company held by the Transferee Company and inter-corporate balances stand cancelled.

e. The deficit arising on amalgamation of Rs. 337.02 Million representing the value of assets over the value of liabilities of the Transferor Company, after cancellation of capital of the transferor Company and the reserves recorded as per point 'd', has been set-off against Restructuring reserve account as created in point 'd' above post-merger

2. With effect from April 1, 2010, the merger of parent company, Fraxis Life Science limited, with the Company has been approved by the respective Board of the directors. The Company is in the process of obtaining approval from High Court of Mumbai in this regard.

3. Exceptional items

a) Based on The Scheme of Amalgamation of Vedic elements Private Limited, the company valued its investment at fair value and net provision for diminution in the value of Investment of Rs.52.58 Million has been reversed.

b) The Company had given a corporate guarantee to Rabo bank, Netherland towards a loan availed by its subsidiary (Galenica B.V.) amounting to Euro 0.665 Million (Rs.42.05 Mio). Since the subsidiary has filed for liquidation, the corporate guarantee was encashed during the year by the Bank and the same is charged under exceptional items.

4. Estimated amounts of contracts remaining to be executed on capital account and not provided for (Net of advances) Rs.147.78 Mio (previous year Rs. 66.50 Mio)

5. Contingent Liabilities

(Rs. In Million)

Particulars As at As at March 31, 2011 March 31, 2010

Sales tax* 16.62 13.20

Income tax* 10.75 11.11

Excise Duty* 0.09 -

Bills Receivables 133.70 97.03 discounted with banks

Total 161.16 121.34

*Outflow, it any, arising out of the said claim would depend on the outcome of the decision of the oppellate authority and the Company's right for future appeal before the judiciary.

The Company has given a Corporate Guarantee to Triodos Sustainable Trade Fund, Vietnam towards a Credit facility availed by its stepdown subsidiary (Vedic Fanxipang Pharma Chemic Company Ltd) amounting to USD 1.30 Million. (Rs.58.05 Million) (Previous Year Rs. Nil) However the step down subsidiary has used facility to an extent of USD 0.7 Million (Rs. 31.26 Million) (Previous Year Rs. Nil) as at the year end.

6. The information disclosed in Schedule H.A (a) to the financial statements with regard to Micro and Small enterprises is based on information collected by the management based on enquiries made by the management with the creditors which have been relied upon by the auditors.

The Company has paid remuneration to one of its director as per the approval received from Central Government. The Managerial Remuneration paid for the year ended March 31, 2011 excludes Rs. 24.88 million for which the Company is in the process of filing for approval with Central Government. Pending such approval the excess amount so paid has been disolved as dues from directors in Schedule G.B. (g).

b. Computation of Net Profit in accordance with Section 349 of the Companies Act, 1956:

13. Related Party Disclosures LIST OF RELATED PARTIES:

Holding Company:

Fraxis Life Sciences Ltd.

Wholly-owned subsidiaries:

SeQuent Global Holdings Ltd.

SeQuent European Holdings Ltd. (step-down subsidiary)

SeQuent IPCO GmbH (step-down subsidiary up to 23rd February 2011)

Vedic Elements Pvt. Ltd. (Merged with the Company w.e.f.1st October 2009)

SeQuent Research Ltd.

SeQuent Antibiotics Pvt. Ltd.

SeQuent Oncolytics Pvt. Ltd.

Subsidiaries:

Galenica B.V.

Codiffar N.V. (wholly Owned Subsidiary of Galenica B.V.)

Elysian Life Sciences Pvt. Ltd. (Refer note 1 below)

Elysian Health Care Pvt. Ltd. (wholly owned subsidiary of Elysian

Life Sciences Pvt. Ltd.)

Vedic fanxipang Pharma Chemic Company Ltd. (wholly owned

subsidiary of Elysian Life Sciences Pvt. Ltd.)

Sanved Research Labs Pvt. Ltd.

Associates:

SeQuent Penems Pvt. Ltd. (Refer note 2 below.)

Key Management Personnel and Enterprises owned or significantly influenced by key management personnel and relative of key management personnel:

Mr. K.R.Ravishanker –Managing Director and Chief Executive Officer

Mr. K.R.N.Moorthy, Deputy Managing Director (W.e.f.8th September 2010)

Dr. Gautam Kumar Das, Executive Director and Chief Operating

Officer

Strides Acrolab Ltd.

ATMA Projects

Agnus Holdings Pvt. Ltd.

Strides Italia SRL (step-down subsidiary)

Strides Arcolab (FA) Ltd.

Latitude Projects Pvt. Ltd.

Strides Vital Nigeria Ltd.

Deesha Properties

Paradime Infrastructure Development Company (Formerly known as Paradime Resorts)

Note:

1. During the year the Company has made additional investment resulting in Elysian Life Sciences Pvt. Ltd. becoming a subsidiary from associate.

2. During the year the Company incorporated SeQuent Penems Pvt. Ltd.(Sequent Penems) as a subsidiary. Subsequently, Sequent Penems made a preferential allotment of shares to SeQuent Speciality chemicals Pvt. Ltd. resulting in SeQuent Penems Pvt. Ltd. becoming an associate as at the year end.

3. Related parties are as identified by the Company and relied upon by the Auditors.

14. Taxation

(a) Provision for deferred tax has been created in accordance with the requirements of Accounting Standard 22" Accounting for taxes on Income"

26. Employee Stock Options Scheme

a) In the extraordinary general meeting held on March 8, 2008, the shareholders approved the issue of 700,000 options under the ESOP scheme. In accordance with the above, the Company established an ESOP trust to administer the scheme on February 25, 2010. On the board meeting dated March 29, 2010, the Company has allotted 700,000 equity shares to the ESOP trust with a Face value of Rs.10 per share at a premium of Rs. 103 per share.

As per the scheme, the Compensation committee grants the options to the employee deemed eligible. The exercise price and vesting period of each option shall be as decided by the compensation committee from time to time. The options granted would normally vest over a maximum period of 4 years from the date of the grant in proportions specified in the scheme. Options may be exercised with in period not exceeding 4 years from the date of first vesting of the options by the Company.

27. Notes on Cash flow statement:

(a) The cash flow has been prepared under Indirect method as set out in Accounting Standard – 3 on Cash Flow Statement" issued under The companies (Accounting Standards) Rules 2006.

(b) Previous year figures have been regrouped/ reclassified wherever necessary to conform to current year's

(c) Cash and Cash Equivalent include balance with banks on lien for letter of credits issued of Rs. 58.57 Million (previous year Rs. 36.08 Million) which are not available for use of the Company.

(d) The amalgamation of Vedic Elements Private Limited with the Company with effect from the appointed date of October 1, 2009 being a non cash transaction has not been reflected in the cash flow statement ((Refer Note B 1 of Schedule P)

28. Previous year figures have been regrouped in line with the current year, wherever necessary.

29. Figures of current year are not comparable with that of previous year as figure for current year include the figure of Vedic Elements Private Limited, Pursuant to Scheme of amalgamation.


Mar 31, 2010

1. (a) Amalgamation of Sequent Scientific Limited with the Company:

The Scheme of Amalgamation of Sequent Scientific Limited ("Transferor Company") with the Company with an Appointed date of 1 April, 2008 (the Scheme) has been sanctioned by the High Court of Bombay and came into effect on 16 September 2009. In terms of the Scheme:

a. The amalgamation has been accounted for under the purchase method prescribed by Accounting Standard (AS) 14 – Accounting for Amalgamations notified by the Central Government of India under the Companies (Accounting Standards) Rules, 2006 and accordingly value of assets and liabilities of the transferor Company have been accounted at fair values based on an independent valuation report or at values determined by the Management and as approved by the Board of DirectoRs.

b. All assets and liabilities of the Transferor Company have been transferred to and vested in the Company retrospectively with effect from April 1, 2008.

c. Seven equity shares of Rs.10 each were allotted for every three equity shares held by the shareholders of the Transferor Company resulting in the allotment of 10,150,000 shares of Rs.10 each to the shareholders of the Transferor Company.

d. The net deficit on amalgamation of Rs.163.00 million representing the excess of shares allotted over the fair value of net assets amalgamated has been set off against the balance in the Securities Premium Account.

e. The assets and liabilities as at April 1, 2008 taken over have been accounted at their fair values as follows:

(b) During the previous year, the Company had acquired all the assets and liabilities of its wholly owned subsidiary company Elixir Chemicals Private Limited (Elixir) with effect from the Appointed Date April 1, 2007, pursuant to a scheme of Amalgamation of Elixir Chemicals Private Limited with the Company as approved by the Honourable High Court of Bombay vide order dated March 20, 2009. Since the Amalgamating Company was wholly owned subsidiary company, no consideration was paid as per the scheme.

The said amalgamation was in the nature of merger and had been accounted as pooling of interest method in accordance with the Accounting Standard 14 Accounting for Amalgamations issued by the Institute of Chartered Accountants of India and as per the treatment prescribed by the scheme. The Accounting treatment followed was as under:

1. All the assets and liabilities of Elixir, as appearing in the books as on April 1, 2007, were recorded in the books of the Company at the respective book values.

2. Difference between carrying cost of the investment in the Elixir as appearing in the books of the Company and the net assets of Elixir of Rs. 32. 47 Mio was adjusted in General Reserve as per the scheme.

3. Elixirs profit after tax for the year ended 31st March 2008 amounting to Rs. 4.89 Mio was credited to the General Reserve account.

4. The inter-company balance of Rs. 76.37 Mio as on 1st April 2008 as appearing in the books of Elixir and the Company was eliminated.

2. Proposed Amalgamation of Vedic Elements Private Limited, a wholly owned subsidiary of the company:

The Scheme of Amalgamation of Vedic Elements Private Ltd (VEPL) with the Company from October 1, 2009 has been approved by Board of Directors of the respective companies in their meeting held on January 27, 2010. Under the scheme all, assets and liabilities of VEPL will be transferred and recorded in the books as per valuation report or value determined by the Management of the Company. Upon the Scheme becoming effective, the shares held by the Company in VEPL shall be cancelled and extinguished and no shares will be issued by the VEPL in consideration of this scheme of amalgamation. The scheme is pending approval of the High Court and therefore no effect has been given to this scheme in this financials.

3. Estimated amounts of contracts remaining to be executed on capital account Rs. 82.95 Mio (previous year Rs. 12.78 Mio)

4. Contingent Liabilities

(Rs. in million)

As at As at

Particulars March 31, March 31,

2010 2009

Bank guarantee and 2.40 25.17

letter of credits

Sales tax 13.20 -

Income tax 11.11 0.62

Bills Receivables 97.03 -

discounted with banks

Total 123.56 25.79

The Company has given a Corporate guarantee to Rabo bank, Netherlands towards a loan secured by its subsidiary (Galenica BV) amounting to Euro.0.6 Millions. (Rs.36.62 Million) (Previous Year : Rs. Nil)

5. The information disclosed in Schedule G.A (a) to the financial statements with regard to Micro and Small enterprises is based on information collected and enquiries made by the management with the creditors which have been relied upon by the auditoRs.

6. Managerial Remuneration:

A. Remuneration paid by the Company to the Managing Director and Whole-time director:

B. Computation of Net Profit in accordance with Section 349 of the Companies Act, 1956:

7. Un-hedged Foreign Currency Exposure

The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

8. Details of Hedged Foreign Currency Exposure:

Forward Exchange Contracts, which are not intended for trading or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables, outstanding as on March 31, 2010 are given below:

9. Segment Reporting:

The Company has identified Pharmaceuticals and Specialty Chemicals as its business segments. Segments have been identified taking into account the nature of services, the differing risks & returns, the organizational structure & the internal reporting system. Since the Company prepares consolidated financial statements, segment information has not been provided in these financial statements.

10. Employee Benefits:

The Company has a defined benefit gratuity plan. The following table summarises the components of net employee benefit expenses recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the respective plans.

11. Related Party Disclosures

List of related parties:

Holding Company:

Fraxis Life Sciences Private Limited

Wholly-owned subsidiaries:

SeQuent Global Holdings Limited

Sequent European Holdings Limited (step-down subsidiary)

Sequent IPCO GmbH (step-down subsidiary)

Vedic Elements Private Limited

Vedic Fanxipang Pharma Chemic Company Limited,Vitenam (step-down subsidiary)

Sequent Research Limited

Sanved Research Labs Private Limited

Galenica B.V. (subsidiary)

Codifar N.V. (wholly owned subsidiary of Galenica B.V.)

Associates

Elysian Life Sciences Private Limited

Elysian Health Care Private Limited (wholly owned subsidiary of Elysian Life Sciences Private Limited)

Key Management Personnel & Enterprises owned or significantly influenced by key management personnel and relative of key management personnel:

Mr. K.R.Ravishankar –Managing Director & Chief Executive Officer

Mr Gautam Kumar Das, Executive Director & Chief Operating Officer (w.e.f. January 7, 2010)

Mr. S.N.Jagannath - Executive Director (Resigned w.e.f January 6, 2010)

Strides Acrolab Limited

Linkace Limited, Cyprus

ATMA Projects

Agnus Holdings Private Limited

Latitude Projects Private Limited

Strides Vital Nigeria Limited

Strides Italia S.r.l. (In Liquidation)

Deesha Properties

Deesha Fine Chemicals

Paradigm Resorts

Agnus Global Holdings Pte Limited, Singapore

Agnus IPCO Limited, British Virgin Islands

Note: Related parties are as identified by the Company and relied upon by the AuditoRs.

12. Taxation

(a) Provision for deferred tax has been created in accordance with the requirements of Accounting Standard 22 “Accounting for taxes on Income”

(b) Net Deferred tax liability comprises the tax impact arising from timing differences on account of:

13. Research & Development Expenditure

a) Details of Research and Development expenditure

b) As per the requirement of Department of Scientific and industrial research (DSIR), Ministry of Science and technology, Government of India, New Delhi, the details of expenditure incurred by the company towards Research and Development for the period April,1, 2009 to March 2010 are as under:

14. Expenditure Debited to the Profit & Loss Account excludes the following expenditure capitalised:

15. Operating Leases:

The Companys significant leasing arrangement is mainly in respect of factory building & office premises; the aggregate lease rent payable on these leasing arrangements charged to Profit & Loss Account is Rs.10.74 Million. (Previous Year : Rs. 4.24 Million)

The Company has entered in to non cancelable lease arrangement for its facilities and office premises, the tenure of lease ranges from 1 year to 10 yeaRs. The said lease arrangements have an escalation clause where in lease rental is subject to an increment of ranging from 5% to 10 %. Details of lease commitments at the year-end are as follows.

16. The quantitative information for purchases, production, consumption and stock of raw material, finished goods are given as under.

17. Particulars of Traded Goods:

None of the items individually account for more than 10% of the total value of the purchases, stock or turnover, hence quantitative details have not been furnished.

18. Employee Stock Options Scheme

In the extraordinary general meeting held on March 8, 2008, the shareholders approved the issue of 700,000 options under the ESOP scheme. In accordance with the above, the Company established an ESOP trust to administer the scheme on February 25, 2010.

On the board meeting dated March 29, 2010, the Company has allotted 700,000 equity shares to the ESOP trust with a Face value of Rs.10 per share at a premium of Rs. 103 per share.

19. Notes on Cash Flow Statement:

(a) The Cash flow has been prepared under Indirect method as set out in Accounting Standard -3 on “Cash Flow Statement” issued under The Companies (Accounting Standards) Rules 2006.

(b) Previous years figures have been regrouped/ reclassified wherever necessary to conform to current years classification.

(c) Cash and Cash Equivalent include balance with banks on lien for letter of credits issued of Rs. 36.08 Million (PY Rs. 13.50 Million) which are not available for use by the Company

(d) The amalgamation of erstwhile Sequent Scientific Limited with the Company with effect from the appointed date of April 1, 2008 being a non-cash transaction has not been reflected in the cash flow statement (Refer Note B(1a) above)

20. Figures for current year are not comparable with those of the previous year as the figures for the current year include the figures of the amalgamating Company, Sequent Scientific Limited.

21. Previous year figures have been regrouped wherever necessary.