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Notes to Accounts of Sterling Biotech Ltd.

Mar 31, 2016

b) Rights, preferences and restrictions attached to shares Equity shares

The Company has only one class of equity shares having a par value of '' 1/- per share. Each shareholder of equity share is entitled for one vote per share held. 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.

Preference Shares

The Company has only one class of Unlisted 8% Redeemable Cumulative Non-Participating Non-Convertible Preference Shares redeemable at the end of 15 years from the date of allotment, carrying no voting rights, of face value of Rs.10/- each issued on private Placement basis to Promoter Group & Associates whether or not they are member(s) of the Company.

Accumulated dividend on proportionate basis of issued Preference Shares as on balance sheet date amounts to Rs.2,118,251,246.

c) Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company

As per the records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

As the company has incurred Losses during the year, the company has not created Debenture Redemption Reserve during the year.

1. Interest rates on Rupee term loans from banks vary in the range of 11.4% p.a. to 16.35% p.a. (linked with BPLR). The said loans are repayable in quarterly installments with a maximum tenure of 8 years. Part of the said loans are also secured by way of second charge on the current assets of the Company, both present and future, on pari passu basis and/or the personal guaranties of the Promoter Directors of the Company.

2. Interest rate on Redeemable Non-Convertible Debentures is 12%. The said debentures are redeemable in 20 quarterly installments starting from November 05, 2010 and last installment due on August 05, 2015.

3. Interest rates on External Commercial Borrowings vary in the range of 5.35% p.a. to 6.62% p.a. (linked with LIBOR). The said ECBs are repayable in half yearly installments starting from May 20, 2012 with a maximum tenure of 6 years.

4. The company has defaulted in repayment of certain debt obligations towards installments and interest. Certain Banks and Financial Institutions have initiated legal action against the Company and/or its directors for recovery of these debt. However, the Company is in continues dialogue with the lenders for bilateral restructuring of its debt. Certain banks have already restructured its debt.

5. The company has executed Rupee Term Loan Agreement on January 09, 2015 with certain lenders including ECB lenders under obligor co-obligor structure for facilities granted to domestic group companies of Sandesara Group to which Company belongs. Accordingly, the securities and future cash flows are charged in favour of the lenders participating in Obligor co-obligor structure and the interest rate for facilities extended by these lenders is at 12% p.a.

6. The Company has completed the Cashless Exchange Offer by issue of the Zero Coupon Convertible Bonds due 2019 aggregating to US$ 206,464,000 (Fresh FCCBs) in exchange of outstanding Zero Percent Foreign Currency Convertible Bonds due 2012. As per the terms of the Cashless Exchange Offer, now the Company''s obligation to the holders of the existing bonds with respect to payment of principal, interest, default interest and premium on existing bonds stands disregarded in full and no other amounts shall be payable to the holders of existing bonds. The summery of Fresh FCCBs due 2019 are as under:

i) The FCCBs carry a 0% coupon with a yield of 5.43% per annum (calculated on semi-annual basis).

ii) The FCCBs will mature on March 25, 2019.

iii) The FCCBs are convertible into equity shares or GDRs of the Company. During the year pursuant to conversion of USD 153,000 FCCBs, the Company has issued 122,400 equity shares. After conversion, the outstanding FCCBs are USD 201,082,000.

iv) The FCCBs are convertible at any time after May 05, 2014 at a conversion price of Rs.60.00 per share with fixed rate of exchange on conversion of '' 48/- per USD.

v) The FCCBs are admitted for trading on the Euro MTF market of Luxembourg Stock Exchange.

7. Interest rates on Working capital Borrowings from Banks vary in the range of 13.65% p.a. to 19.00% p.a. (linked with BPLR). The said loans are repayable on demand and also secured by way of a second charge on the fixed assets of the Company, on pari passu basis. Part of the said loans are additionally secured by way of a personal gurantees of the two Directors of the Company.

8. Interest rate on the Short Term Loans from Banks repayable during 2016 and 2015 vary in the range of 13.25% to 15%.

Note : Additions to Plant & Machinery includes Borrowing cost and exchange variation on foreign currency loans for expansion projects.

Initially, during the year 2013, the Company has decided to develop an improved process of manufacturing of Gelatin with higher yield and effective colors and viscosity, which is typically high for high Bloom gelatins, to retain higher profits and sales realization from it. The international standards are also becoming stringent and more demanding in terms of parameters. The Company is always improving its product and it''s a continuous effort. Considering the same, the Company has identified the new process for proper Ph, Moisture control, lesser ASh, Control Sulpher dioxide content (So2), acceptable microbiological properties and accordingly charged the bone and the same was lying in the process with various utilities application as Work In Process stage for development to improvise yield and technical properties. While gelatin is very stable in its gel form, various factors such as pH, temperature or bacterial environment may cause an hydrolysis of the protein chain yielding not only a decreased viscosity but also a decrease in Bloom. However, the company continued to invest the funds in inventory of Bone, Lime, HCL and utilities in work in process stage as the improvement seen at work in process stage was highly encouraging and the technical team of the Company was convinced that the development is in right direction.

During the year 2014, due to the stringent pollution control norms for ETP plant, the Company was forced to keep material for longer period of even more than 210 days. Resultant in the process, instead of development of better ossien, all gelatin licked up during liming process. Ossien was lying without any other process and liming reaction was continued. Accordingly, Company was forced to take decision to dispose off the material without further extraction of Gelatin to avoid contamination.

As the inventory was stored & processed for new developmental activity of the Company whereas the Company got abnormal process cost, therefore the said cost of Rs. 209.52 crores will be carried forward for 10 years and will be amortized over such period.

9. Dues to micro and small enterprises

Based on the information received by the Company from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (The Act) there are no amounts due to such vendors during the year and as at the year end. Therefore, disclosure required under the Act have not been given.

10. Previous year figures

Notes referred to our report of even date.

Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current period classification / disclosure.

These are the notes referred to in our report of even date.


Dec 31, 2014

1. Nature of Operations

Sterling Biotech Limited ("The Company") is engaged in the manufacturing of Pharma Grade Gelatine & Di-Calcium Phosphate and other Pharma products.

2. SEGMENTAL REPORTING

The company''s operations fall under single segment; hence Segment Reporting as defined under AS-17 is not applicable to the Company.

3. Related Party Disclosures

A) Names of related Parties and their relationship

i) Details of Key Management Personnel

Mr. Nitin J. Sandesara - Managing Director

Mr. Chetan J. Sandesara - Joint Managing Director

ii) Enterprises in which significant influence is exercised by Key Management Personnel

Sterling SEZ and Infrastructure Limited Sterling Oil Resources Limited Sterling Port Limited

Sterling International Enterprises Limited

PMT Machines Limited

Atlantic Bluewater Services Pvt. Ltd.

British Oil & Gas Exploration Ltd.

Sterling Fincom Private Limited, Mauritius (Subsidiary)

Sterling Commercial FZE, U.A.E. (subsidiary of Sterling Fincom Private Limited, Mauritius)

4. Dues to micro and small enterprises

Based on the information received by the Company from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (The Act) there are no amounts due to such vendors during the year and as at the year end. Therefore, disclosure required under the Act have not been given.

5. Previous year figures

Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current year classification / disclosure.


Dec 31, 2013

1. Contingent Liabilities (Not provided for) ( Rs.in Lacs)

Estimated amount of contracts remaining to be executed 778.93 885.81 on capital account

Letters of credit issued by the Banks Nil Nil

Disputed claims / levies in respect of claims by other parties 8,286.44 7,333.29

2. SEGMENTAL REPORTING

The company''s operations fall under single segment; hence Segment Reporting as defined under AS-17 is not applicable to the Company.

3. Related Party Disclosures

A) Names of related Parties and their relationship

i) Details of Key Management Personnel ii) Enterprises in which significant influence

Mr. Nitin J. Sandesara - Chairman and Managing Director is exercised by Key Management

Mr. Chetan J. Sandesara - Joint Managing Director Personnel

Sterling SEZ and Infrastructure Limited

Sterling Oil Resources Limited

Sterling Port Limited

Atlantic Bluewater Services Pvt. Ltd.

British Oil & Gas Exploration Ltd.

Sterling Fincom Private Limited, Mauritius

(Subsidiary)

Sterling Commercial FZE, U.A.E.

(subsidiary of Sterling Fincom Private

Limited, Mauritius)

4. Dues to micro and small enterprises

Based on the information received by the Company from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (The Act) there are no amounts due to such vendors during the year and as at the year end. Therefore, disclosure required under the Act have not been given.

5. Previous year figures

Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current year classification / disclosure.


Dec 31, 2012

1. Nature of Operations

Sterling Biotech Limited ("The Company") is engaged in the manufacturing of Pharma Grade Gelatine & Di-Calcium Phosphate and other Pharma products.

2. SEGMENTAL REPORTING

The company''s operations fall under single segment; hence Segment Reporting as defined under AS-17 is not applicable to the Company.

3. Dues to micro and small enterprises

Based on the information received by the Company from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (The Act) there are no amounts due to such vendors during the year and as at the year end. Therefore, disclosure required under the Act have not been given.

4. Previous year figures

The financial statements for the year ended 31st December 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended 31st December 2012 are prepared as per the Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year''s classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Dec 31, 2011

1. Estimated amount of contracts remaining to be executed on capital account and not provided for as on 31st December, 201 1 is Rs 2786.52 Lacs [Previous Year Rs 3236.1 8 Lacs].

2. Contingent liabilities not provided for on account of letters of credit as on 31st December, 2011 are of Rs 4986.00 Lacs [Previous Year Rs 10,100.00 Lacs].

3. Current income Tax is provided for the year as per provisions of the Minimum Alternate Tax under the Income Tax Act, 1961.

4. The company has provided for a deferred tax liability of Rs 300.01 Lacs for the year ended December 31' 2011 on additional depreciation on fixed assets under Income Tax Act [Previous year Rs 3,1 00.00 Lacs].

5. The company's operations fall under single segment. Hence Segmental Reporting as defined under AS 17 is not applicable.

6. Based on the information received by the company from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (The Act) there are no amounts due to such vendors during the year and as at the year end. Therefore, disclosures required under the Act have not been given.

7. The Ministry of Corporate Affairs, Government of India vide its General Notification No. S.O. 301(E) dated 8rt' February 201 1 issued under section 21 1(3) of the Companies Act, 1956 has exempted certain classes of companies from disclosing certain information in their Profit and Loss Account. The Company being an 'Export Oriented Company' is entitled to the exemption. Accordingly, disclosures mandated by paragraphs 3(i)(a), 3(ii)(a), 3(ii)(b) and 3(ii)(d) of Part II, Schedule VI to the Companies Act, 1956 have not been provided.

8. Figures of the previous year have been regrouped, reclassified whenever necessary to make them Comparable with the current year's figures.


Dec 31, 2010

1. Estimated amount of contracts remaining to be executed on capital account and not provided for as on 31st December, 2010 is Rs. 3,236.18 Lacs [Previous year Rs.4,643.52 Lacs].

2. Contingent liabilities not provided for on account of letters of credit as on 31st December, 2010 are of Rs.10,100.00 Lacs [Previous year Rs. 4,986.27 Lacs].

3. Current income Tax is provided for the year as per provisions of the Minimum Alternate tax under the Income Tax Act, 1961.

4. The company has provided for a deferred tax liability of Rs. 3,100 Lacs for the year ended December 31, 2010 on additional depreciation on fixed assets under Income Tax Act [Previous year? 3,350 Lacs].

5. The company's operations fall under single segment. Hence Segmental Reporting as defined under AS 17 is not applicable.

6. Based on the information received by the company from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (The Act) there are no amounts due to such vendors during the year and as at the year end. Therefore, disclosures required under the Act have note been given.

7. Additional information pursuant to the provisions of Paragraph (3) & (4) of Part IV of Schedule VI to the Companies Act, 1956, together with other notes.

The Ministry of Company Affairs, New Delhi have granted exemption to the Company from disclosure of quantitative details in compliance of Para 3(i)(a) and 3(ii)(a)(1)&(2) of Part II, Schedule VI to the Companies Act, 1956 in respect of the Financial Year ended 31st December, 2010 by their order no. 46/201/2010-CL-lll dated 01.11.2010 under Section 211 (4) of the Companies Act, 1956.

8. Related Party Information

A. Names of related parties and relationships. i) Details of Key Management Personnel

- Mr. Nitin J. Sandesara - Chairman and Managing Director

- Mr. Chetan J. Sandesara - Joint Managing Director

ii) Enterprises in which significant influence is exercised by Key Management Personnel

- Sterling SEZ and Infrastructure Limited

- Sterling Oil Resources Limited

- Sterling Port Limited

9. Figures of the previous year have been regrouped, reclassified whenever necessary to make them Comparable with the current year's figures.


Dec 31, 2009

1. Estimated amount of contracts remaining to be executed on capital account and not provided for as on 3rtDecember,2009 is Rs. 4,643.52 Lacs [Previousyear Rs. 3,721.69 Lacs].

2. Contingent liabilities not provided for on account of letters of credit as on 31st December, 2009 are of Rs. 4,986.27 Lacs [Previous year Rs. 4,497.1 6 Lacs].

3. Current income Tax is provided for the year as per provisions of the Minimum Alternate Tax under the lncomeTaxAct,1961.

4. The company has provided for a deferred tax liability of Rs. 3,350 Lacs for the year ended December 31,2009 on additional depreciation on fixed assets under Income Tax Act, 1 961 [Previous year Rs. 7,550 Lacs].

5. The companys operations fall under single segment. Hence Segmental Reporting as defined under AS 1 7 isnotapplicable.

6. Based on the information received by the company from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (The Act) there are no amounts due to such vendors during theyearand as at the yea rend. Therefore, disclosures required underthe Act have not been given.

7. Additional information pursuant to the provisions of Paragraph (3) & (4) of Part IV of Schedule VI to the Companies Act, 1956, together withother notes:

The Ministry of Corporate Affairs, New Delhi, have granted exemption to the Company from disclosure of quantitative details in compliance of Para 3(i)(a) and 3(ii)(a) (1) & (2) of Part II, Schedule VI to the Companies Act, 1 956 In respect of the Financial Year ended 31st December, 2009 by their order No. 46/234/2009-CL-lll dated 04.11.2009 under Section 211 (4) of the Companies Act, 1956.

8. Related Party Information

A. Names of related parties and relationships.

i) Details of Key Management Personnel

- Mr. Nitin J. Sandesara Chairman and Managing Director

- Mr. Chetan J. Sandesara Joint Managing Director

ii) Enterprises in which significant influence is exercised by Key Management Personnel

- Sterling SEZ and Infrastructure Limited

- Sterling Oil Resources Limited

9. Figures of the previous year have been regrouped, reclassified whenever necessary to make them Comparable with the current years figures.


Dec 31, 2008

1. Estimated amount of contracts remaining to be executed on capital account and not provided for as on 31st December, 2008 is Rs. 3721.69 Lacs [Previous year Rs.8763.12 Lacs].

2. Contingent liabilities not provided for on account of letters of credit as on 31st December, 2008 are of Rs. 4497.16 Lacs [Previous year Rs.1598.07 Lacs].

3. Current income Tax is provided for the year as per provisions of the Minimum Alternate tax under the Income Tax Act, 1961.

4. The company has provided for a deferred tax liability of Rs. 7550 Lacs for the year ended December 31,2008 on additional depreciation on fixed assets under Income Tax Act [Previous year Rs.6350 Lacs].

5. The companys operations fall under single segment. Hence Segmental Reporting as defined under AS 17 is not applicable.

6. The company is not in a position to identify the dues to small scale industrial undertakings as on the balance sheet date in absence of the status of the creditors available with the company.

7. Additional information pursuant to the provisions of Paragraph (3) & (4) of Part IV of Schedule VI to the Companies Act, 1956, together with other notes.

The Ministry of Company Affairs, New Delhi have granted exemption to the Company from disclosure of quantitative details in compliance of Para 3(i) (a) and 3(ii) (a) of Part II, Schedule VI to the Companies Act, 1956 in respect of the Financial Year ended 31st December, 2008 by their order no. 46/221/2008-CL-lll dated 11-12-2008 under Section211(4) of the Companies Act, 1956.

8. Figures of the previous year have been regrouped, reclassified whenever necessary to make them Comparable with the current years figures.

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