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Notes to Accounts of Shilpa Medicare Ltd.

Mar 31, 2016

1. In the opinion of the Board, all assets other than fixed assets and non current investments, have a realisable value in the ordinary course of business.

2. Balances of Trade Receivables / Trade Payables / Advances and Security deposits are subject to confirmation.

3. Based on the information available with the Amount payable under the " Micro, Small and Medium Enterprises Development Act, 2006" is based on the information received by the Company. Amount due to such Venders as at Balance Sheet date is Nil (0.12) Included in Trade Payable Note no.08

4. The Company has exercised the option of capitalizing the exchange difference arising on reporting of long term foreign currency monetary item at rates different from those at which they where initially recorded, so far as they related to the acquisition of depreciable capital assets as per para 46A to AS-11.The effect of change in Foreign Exchange Rates'' vide Notification No.GSR 914(E) dated 29th December, 2011 issued by The Ministry of Corporate Affairs. In other cases the difference has been accumulated in ''Foreign Monetary Item Transalation Difference A/c to be amortized over the balance period of such long term assets as per said notification.

By virtue of above the Company has capitalized Rs 144.22 lakhs (PY Rs 105.09) lakhs to the Fixed Assets acquired out of such External Commercial Borrowings (ECB). Being the exchange difference has been accmulated "Foreign Monetary Iteam Transalation Difference A/c", being Loss/gain arising on account of reinstatment of investment in Foreign Subsidiary.

5. The Net worth of Reva Pharmachem Pvt Ltd (Associate Company) as at the Balance Sheet date has been completely eroded. However, the management is of the view that since the Investments are long term in nature no provision is required to be made.

6. Out of the sum of Rs 48.27 lakhs(PY Rs.41.27 Lakhs) the Company has filed appeals before the Karnataka Appellate Tribunal for refund of input tax paid on Capital Goods amounting to Rs.26.48 lakhs (PY: Rs.26.48) lakhs and Rs. 4.18 Lakhs (Rs.2.43 Lakhs) paid on regular consumable items which has been disallowed by the assessing authority under Karnataka Value Added Tax Act, 2003 while concluding the assessment, which in the opinion of the Company are allowable under the Act. The same is shown under note 14(c)(ii)

7. The Company has hedged the interest rate on ECB of US$ 10 MN . The aggregate amount of loan covered under the said interest rate swap as at March 31, 2016 is Rs. 1658.28 Lakhs US$ 2.5 MN ( P.Y. Rs.3,129.53)(US$ 5.00 MN). The periodic net payments related to interest rate swap is partly recorded as finanace cost & partly recorded under pre-operative expenses since part of the amount is utilized in the creation of assets which are pending for capatilization.

8. Capital advances includes a sum of Rs.344.83 lakhs (P.Y 332.48)(reinstated amount) paid to ISO Tech Design, Canada towards supply of machinery for its Formulation unit at Jadcherla. Due to inordinate delay by vendor, the Company terminated its order and filed a law suit for recovery of its amount alongwith interest and damages with the local court in Canada. The hearing under process. As the outcome of the case cannot be determined presently, the Company has not made any provision.

9. During the year the face value of Company equity shares have been split from Rs.2/- to Re.1/-. Effect of the same has been given in the EPS for all the periods presented in accordance with Accounting Standard 20 "Earnings per share" issued by the Institute of Chartered Accountants of India (ICAI).

10. During the year the Income Tax Department has initiated action under Section, 132 of the Income Tax Act, on 16.12.2015. The proceeding are under way and as on the Balance Sheet date no demand has been raised by the department. The liability if any, shall be dealt with as and when the same arises.

11. Figures of the previous year have been regrouped/rearranged wherever necessary.


Mar 31, 2014

(All amount are in Indian Rupees in lakhs, except shares data & where otherwise stated)

1.(a) Rights, Preferences and Restrictions attached to each class of Shares:

Equity Shares: The company has 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, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

* Fixed deposit with original maturity of more than 3-months has been given in the form of Guarantee to " Chief Control Board Officer, "The Andhra Pradesh Pollution Control Board", Hyderabad and Standard Chartered Bank against LC/FLC

2. Contingent Liabilities

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

a) Foreign letter of credit 1,258.59 1,304.13

b) Bank Guarantees / Corporate Guarantee 10.00 10.90

c) Claims against the Company not acknowledeged as debts 1,194.44 492.15

d) Estimated amount of contracts remain to be executed on account of 1,837.18 2,199.70 capital commitments not provided for (net of advance )

TOTAL 4,300.2~ 4,00688"

3. Figures of the previous year have been regrouped/rearranged wherever necessary.

4.The Company is mainly engaged in the business of Bulk Drugs Manufacturing. With a view to integrate its overall business, the Company from the financial year 2013-2014 has commissioned its formulation factilities alongwith development of few products in formulation business. This business, the Company considers as Inter-related and integrated business of "Pharmaceutical Products" and hence no separate segemental reporting is required.

5.In the opinion of the Board, all assets other than fixed assets and non current investments, have a realisable value in the ordinary course of business

6. Balances of Trade receivables / Trade payables / Advances and Security deposits are subject to confirmation.

7. The Company has not received any intimation from "Suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006. Hence, disclosures relating to amount unpaid as at the year end together with interest paid / payable under this Act cannot be ascertained.

8. The Company has exercised the option of capitalizing the exchange difference arising on reporting of long term foreign currency monetary items at rates difference from those at which they where initially recorded , so far as they related to the acquisition of depreciable capital assets as per para 46A to As-11" The effect of change in Foreign Exchange Rates'' vide Notification No.GSR 914(E) dated 29th December ,2011 issued by The Ministry of Corporate Affairs. In other cases the difference has been accumulated in ''Foreign Monetary Iteam Transsalation Difference A/c" to be amortized over the balance period of such long term assets as per said notification. By virtueof above the Company has capitalized Rs 545.90 lakhs (P.Y Rs 116.84) lakhs to the Fixed Assets acquired out of such External Commercial Borrowings (ECB)being the Exchange difference. Further, exchange gain / loss on reinstatement of investments in Wholly owned Foregin subsidiary has been accumulated in "Foreign Monetary Iteam Transalation Difference A/c".

9. As on 31.03.2014 demands from Income Tax Department are as under:-

a) AY 2010-11 Rs 402.57 Lakhs ( P.Y 420.57) Lakhs

b) AY 2011-12 Rs 951.94 Lakhs

Based on the judcial pronouncement and legal advises, the Company has contested the above demands before the CIT(Appeals), Hubli.

10. The Net worth of Reva Pharmachem Pvt Ltd (Associate Company) as at the Balance Sheet date has been completely eroded. However, the management is of the view that since the Investments are long term in nature no provision is required to be made.

11. An amount of Rs 23.28 Lakhs paid in the year 2010-11 pertaining to A.Y 2008-09 and Rs 100.00 Lakhs in 2013-14 pertaining to A.Y 2010-11 against the disputed tax demands for which the Company had filed an appeal before the relevant authorities. Case of A.Y. 2008-09 has been disposed - off in Company''s favour, and of A.Y 2010-11 is pending before the authorities The same is shown under note no.14 c (i).

12. Out of the sum of Rs. 32.83 Lakhs (P.Y - Rs 30.48 lakhs) the Company had preferred an appeal for refund of input tax paid on capital goods amounting to Rs.26.88 lakhs (PY - Rs.26.88) lakhs before the Hon.Tribunal under Karnataka Value Added Tax Act, 2003,which has been remanded back by the Hon. Tribunal to the concerned Assessing Authority for fresh disposal. The same is shown under note 14C(ii)

13. "The Company has hedged the interest rate on ECB of US$ 10 million facility. The aggregate amount of loan covered under the said interest rate swap as at March 31, 2014 is Rs.4958.09 Lakhs (US$ 7.50million). The periodic net payments related to interest rate swap is recorded as finanace cost & finance cost- pre-operative, since the few assets purchased from such loan are pending for capatilization."

14. Capital advances includes a sum of Rs.366.88 lakhs P.Y 373.65 lakhs (reinstated value) paid to ISO Tech Design, Canada by the Company towards supply of machinery for its Formulation project at Jadcherla. Due to inordinate delay by vendor, the Company terminated its order and has filed a law suit for recovery of its amount alongwith interest and damages with the local courts in Canada. The preliminary hearing and recovery proceeding are under process. As the outcome of the case cannot be determined presently, the Company has not made any provision.

15. The Company had allotted 1764705 Equity shares on 15/05/2014 on preferential basis. The same have been considered for the purpose of computing Diluted EPS for the current year.


Mar 31, 2013

Basis of Preparation

The financial statements have been prepared to comply in all material aspects with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and as notified under the Companies (Accounting Standard) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis. The Company generally follows mercantile system of accounting and recognizes all the income and expenditure on accrual basis.

The Accounting policies adopted in the presentation of financial statements are consistent with those of previous year.

1 Contingent Liabilities

As at 31st As at 31st Particulars March 2013 March 2012

a) Foreign letter of credit 1,304.13 952.16

b) Bank guarantees. / Corporate guarantee 10.90 11.54

c) Letter of comfort. Nil 683.40

d) Claims aginst the Company not acknowledege as debts. 442.97 142.90

e) Estimate amount of contract remain to be executed on account of 2,199.70 3,800.79 capital commitments not provided for (net of advance)

TOTAL 3,957.71 5,590.80

2 Related Parties Disclosures Pursuant To Accounting Standard 18:

List of related parties

1. Associates

a) Reva Pharmachem Pvt Ltd

2. Subsidiaries

a) Zatortia Holdings Ltd

b) Loba Feinchemie Gmbh

c) Raichem Medicare Pvt Ltd

d) Nu- Therapeutics Pvt Limted Hyderabad

3. Key Management Personnel

a) Omprakash Inani

b) Vishnukanth .C. Bhutada

4. Relatives

a) Dharmavati Bhutada

b) Deepak Kumar Inani

3 During the year the Company has only one reportable segments viz., Bulk drug & Intermediates in accordance with the requirment of As-17 " Segment Reporting ". Hence Segment Reporting is not applicable to the Company.

4 In the opinion of the Board, all assets other than fixed assets and non current investments, have a realisable value in the ordinary course of business which is not different from the amount at which it is stated.

5 Balances of Trade receivables / Trade payables / Advances and Security deposits are subject to balance confirmation.

6 The Company has not received any intimation from "Suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures relating to amount unpaid as at the year end together with interest paid / payable under this act cannot be ascertained.

7 The Company has exercised the option of capitalizing the exchange difference arising on reporting of long term foreign currency monetary item at rates difference from those at which they where initially recorded , so far as they related to the acquisition of depreciable capital assets as per para 46A to As-11" The effect of change in Foreign Exchange Rates'' vide Notification No.GSR 914(E) dated 29th December, 2011 issued by The Ministry of Corporate Affairs. In other cases the difference has been accumulated in ''Foreign Monetary Item Transsalation Difference A/c" to be amortized over the balance period of such long term assets as per said notification.

By virtue of above the Company has capitalized Rs 116.84 lakhs (P.Y Rs. 274.72) lakhs to the Fixed Assets acquired out of such External Commercial Borrowings (ECB)being the Exchange difference has been accumulated in "Foreign Monetary Item Transalation Difference A/c", being gain arises on account of reinstatment of investment in Wholly Owned Foreign subsidiary.

8 As on 31.03.2013 demand from Income Tax Depertment on various issues amounting to Rs. 420.57 lakhs are received based on the Judicial pronouncement and legal advises; Company has contested the above demands. Appeal filed against demand received for A.Y 2004-05 to 2007-08 have been disposed off in Company''s favour. However, the effect of such order is yet to be given by the department.

9 The Net worth of Reva Pharmachem Pvt Ltd (Associate Company) as at the Balance Sheet date has been completely eroded.

However, the management is of the view that since the Investments are long term in nature no provision is required to be made.

10 An amount of Rs .23.28 lakhs paid in the year 2010-11 against the disputed tax demand for which the Company had filed an appeal before the relevant authroties. The case has been disposed off in Company''s Favour. However, the appeal effect is yet to be given by the department. The same is shown under note no.14.

11 Out of the sum of Rs 30.48 lakhs the Company had preferred an appeal for refund of input tax paid on capital goods amounting to Rs.26.88 lakhs (PY: Rs.26.88) lakhs before the Hon.Tribunal under Karnataka Value Added Tax Act, 2003,which has been remanded back by the Hon. Tribunal to the concern Assessing authority for fresh disposal. The same is shown as receivable under the head "VAT paid on Capital & Other items".

12 Capital Advances includes a sum of Rs.373.64 lakhs paid to ISO Tech Design, Canada by the Company towards supply of machinery for its Formulation project at Jadcherla. Due to inordinate delay by vendor, the Company has terminated its order and has filed a law suit for recovery of its amount alongwith interest and damages with the local courts in canada. The preliminary hearing and discovery proceeding are under process. As the outcome of the case cannot be determined presently the Company has not made any provision.

13 During the year ended March 31st 2013, the Company has entered into floating to fixed interest swap to hedge the inter- est rate exposure on utilisation of US$ 10 million External Commercial Borrowings facility. The aggregate amount of loan covered under the said interest rate swap as at March 31, 2013 is Rs. 5436.58 lakhs (US$ 10 million). The periodic net payment related to interest rate swap recorded as interest expenses under pre-operative expenses since the capital work is under progress.

14 Previous years figures includes figure of Raichem Lifescience Pvt Ltd on account of its Merger with Shilpa Medicare Ltd (SML) w.e.f. 01.04.2011, as per the order of Hon''ble High Court of Andhra Pradesh Hyderabad .


Mar 31, 2012

Basis of Preparation

The financial statements have been prepared to comply in all material aspects with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and as notified under the Companies (Accounting Standard) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis. The Company generally follows mercantile system of accounting and recognizes all income and expenditure on accrual basis.

The Accounting policies adopted in the presentation of financial statements are consistent with those of previous year.

1. Contingent Liabilities And Commitments

Particulars As at 31 March, 2012 As at 31 March, 2011

a) Local & Foreign Letter of Credit 952.16 898.33

b) Bank Guarantees. 1.54 13.61

c) Letter of Comfort. 683.40 1,264.80

d) Claims aginst the Company not acknowledeged as debts. 142.90 75.83

e) Corporate guarantee given to Standard Chartered Bank 2,500.00 - on behalf of Raichem Life Sciences Pvt Limited ( Wholly Owned Subsidary Company)

f) Estimated amount of contracts remained to be executed 371.19 414.59 on capital account not provided for (net of advance)

TOTAL 4,651.19 2,667.16

Actuarial gain / loss is recognised immediately. The estimates of salary increase take into account inflation, promotion etc.

The Company has various schemes (funded/unfunded) for payment of gratuity to all eligible employees calculated at specific no. of days (ranging from 15 days to 1 month) of the last drawn salary depending upon tenure of service for each year of completed service subject to minimum of five years payable at the time of separation upon superannuation or on exit otherwise.

2. During the year the Company has only one reportable segments viz., Bulk Drug & Intermediates in accordance with the requirment of AS-17 " Segment Reporting" . Hence Segment Reporting is not applicable to the Company.

3. In the opinion of the Board, all assets other than fixed assets and non current investments, have a realisable value in the ordinary course of business which is not different from the amount at which it is stated.

4. Balances of Trade Receivables/Trade payables/Advances and Security deposits are subject to Balance Confirmation.

5. The Company has not received any intimation from "Suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures relating to amount unpaid as at the year end together with interest paid/payable under this Act cannot be ascertained.

6. The Company has exercised the option of capitalizing the exchange differences arising on reporting of long-term foreign currency monetary items at rates different from those at which they were initially recorded, so far as they relate to the acquisition of depreciable capital asset as per para 46A to AS-11 "The effects of changes in Foreign Exchange Rates" vide notification No. GSR 914(E) dated 29th December, 2011 issued by The Ministry of Corporate Affairs. In other cases, the difference has been accumulated in "Foreign Monetary Item Translation Difference A/c" to be amortized over the balance period of such long term asset as per the said notification.

By virtue of above the Company has capitalized Rs.274.72,lakhs to the Fixed Assets acquired out of such External Commercial Borrowings(ECB) being the Exchange difference and has transferred Rs.260.68 Lakhs in "Foreign Monetary Item Translation Difference A/c", being gain arising on account of reinstatement of Investment in Wholly Owned Foreign Subsidiary.

7. Income tax demand of Rs.120.50 Lakhs (PY: Rs.53.42 Lakhs ) pertaining to earlier years is contested in appeal as per the legal advise based on certain Judicial pronouncements relating to identical point of law, therefore no provision is made for such demand.

8. Net worth of Reva Pharmachem Pvt Ltd (Associate Company) as at the Balance Sheet date has been completely eroded. However, the management is of the view that since the Investments are long term in nature, hence no provision is required to be made.

9. An amount of Rs.23.28 Lakhs (PY: Rs.23.28 Lakhs) is paid against the disputed tax demand and the same is shown under note no.15.

10. The Company is in appeal before the Hon.Tribunal in respect of its claim of Refund of Input Tax paid on Capital Goods amounting to Rs.26.89 lakhs (PY: Rs.28.11 Lakhs) under Karnataka Value Added Tax Act, 2003, the same is shown as receivable under the head "VAT receivable on Capital Goods & Other items".

11. Previous Year Figures

Till the year ended 31st March 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for presentation of its financial statements. For the year ended 31st March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. The Company has reclassified previous year figures to conform to the current classification.


Mar 31, 2010

1. Previous years figures have been regrouped, rearranged and / or reworked wherever necessary.

2. Figures have been rounded off to the nearest rupee.

3. Working Capital Loans from The Lakshmi Vilas Bank Ltd., is secured by hypothecation of stock and book debts and by charge on the Fixed Assets of the Company.

4. Following term loans :

a) External Commercial Borrowing (ECB) from ICICI Bank Ltd is secured by first charge on all movable and immovable properties created by such loans and irrevocable guarantee of some of the Directors of the Company.

b) Term Loan from Axis Bank is secured by First Pari passu charge on all fixed assets of the Company and Collateral pari passu charge on the current assets of the Company.

c) Term Loan from KSFC is secured by charge on assets of erstwhile Shilpa Organics (P) Ltd.

5. In the opinion of the Management, the value of the Current Assets, Loans and Advances under the ordinary course of business would at least be equal to the amount as stated in the Balance Sheet.

6. Sundry Debtors and Sundry Creditors are subject to confirmation.

7. There are no delays in payments to Micro and Small Enterprises as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006. The Information regarding Micro and Small enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

8. Exchange fluctuation includes credit of Rs. 435,75,000/- (PY: Debit 108,460,000) on account of Exchange difference arising in respect of outstanding ECB Loan and Debit/Credit Rs. Nil /-(PY: 4,310,195/-) in respect of Loss / Profit arising from Forward Exchange Contracts for the year. There are no other outstanding Forward Exchange Contracts on 31.03.2010.

The Company has various schemes (funded/unfunded) for payment of gratuity to all eligible employees calculated at specific no. of days (ranging from 15 days to 1 month) of the last drawn salary depending upon tenure of service for each year of completed service subject to minimum of five years payable at the time of separation upon superannuation or on exit otherwise.

9 Contingent Liabilities:

Particulars Current Year Previous Year

For Local and Foreign L/Cs 56,086,888 53,009,622

Guarantees 3,330,000 1,804,000

Bills discounted 15,302,106 8,214,081

Letter of Comfort 121,120,000 202,440,000

Estimated amount of contracts

remaining to be executed on capital

account and not provided for

(Net of advances) 191,72,443 9,950,000

Claim against the Company not

acknowledged as debts 2,340,000 800,000

Total 217,351,437 276,217,703

10. RELATED PARTIES DISCLOSURES PURSUANT TO ACCOUNTING STANDARD 18: List of related parties

1. Associates 2. Subsidiaries

Bhakra Investments (P) Ltd Zatortia Holdings Ltd

Shilpa Finvest (P) Ltd Raichem Lifesciences (P) Ltd

Srinidhi Cottons (P) Ltd Loba Feinchemie Gmbh

Reva Pharma Chem Pvt Ltd Raichem Medicare Pvt Ltd

3. Key Management Personnel 4. Relatives

Vishnukant C Bhutada Dharmavati Bhutada

Deepak Kumar Inani



 
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