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Notes to Accounts of Unichem Laboratories Ltd.

Mar 31, 2016

1. On 9th July, 2014, the European Commission decided to impose an unjustified fine of € 13.97 million, jointly and severally on the Company and its subsidiary Niche Generics Ltd contending that they had acted in breach of EU competition law as Niche Generics Ltd had, in early 2005 (when the Company was only a part owner and financial investor in Niche) had agreed to settle a financially crippling patent litigation with Laboratories Servier. The Company vehemently denies any wrongdoing on the part of either itself or Niche. Both the Company & Niche have submitted appeal in September 2014 to the EU General Court seeking appropriate relief in the matter.

2. Estimated amount of Contracts remaining to be executed (Net of Advances) on Capital & other account not provided for Rs. 18,253.29 lacs (Previous year Rs. 13,747.56 lacs).

3. (a) Cash credit, Rs. 790.15 lacs (Previous Year Rs. NIL) from Bank of India and Bank of Baroda are secured against hypothecation of Inventories, Book debts and an equitable mortgage of immovable properties located at Jogeshwari, Roha, Ghaziabad on a second, subject and subservient pari passu charge basis (First charge holder being fully satisfied and paid.)

In addition the cash credit facilities are also secured by an equitable mortgage of the Company''s immovable properties situated at Goa and Baddi on a second, subject and subservient basis. (First charge holder being fully satisfied and paid)

(b) Loan from Biotechnology Industry Research Assistance Council is secured against hypothecation of movable properties including any and all equipment , apparatus machineries , machineries spares, tools and other accessories , goods and / or other moveable property, present & future, situated at Biotechnology R&D Centre, Goa.

4. There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium 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.

5. The company has reviewed the investments in wholly owned subsidiaries. In respect of its investment in Unichem Farmaceutica Do Brazil Ltda, Brazil, the provision for diminution of this investment forthe year has been increased to Rs. 2,277.63 compared to Rs. 434.55 lacs made for the previous year. This has resulted in the aggregate provision for diminution to Rs. 3,581.41 lacs (previous year: 1,303.77lacs)onatotalinvestmentof Rs.5,695.88lacs (previous year Rs. 5,116.27 lacs). This provision for diminution for the current year is increased after an internal assessment based on circumstances prevailing as at the balance sheet date, such as past performance, results, assets, expected cashflows, projections, status of product approvals, nature of the market and regulatory conditions. The said increase in diminution and the total diminution is considered adequate as at the balance sheet date.

6. Employee Benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on retirement / resignation or retirement under VRS at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The Company has a defined benefit obligation for Leave encashment which is partly funded . Generally the leave encashment is paid to employees in case of resignation , retirement under VRS or retirement except in some case the same is paid annually.

The following tables summarise the funded status and amounts recognised in the balance sheet for gratuity & leave encashment benefits.

7. Operating lease:

Premises and certain vehicles are obtained on operating lease and are renewable and non-cancellable. There are no restrictions imposed by lease arrangements. The lease term is based on individual agreements. There are no sub-leases.

The aggregate lease rentals payable, are charged as rent ( Refer Note no. 27 & 28 ) in the Statement of Profit & Loss.

8. Information pursuant to the provisions of Schedule III to the Companies Act, 2013 as certified by management.


Mar 31, 2015

Rights, preferences and restrictions attached to Equity Shares.

The Company has one class of equity shares having a par value of Rs. 2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, 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.

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

( For Shares reserved for issue under ESOS, refer note 43)

2 Contingent Liabilities : (Rs. in lacs) 2014-15 2013-14

(i) Claims not acknowledged as debts* 1,832.22 1,568.58

(ii) In respect of the Guarantees given to Bank on behalf of :

-Subsidiaries 2,352.75 2,509.50

(iii) Other money for which the company is Contingently liable 224.84 374.44

Total 4,409.81 4,452.52

* includes Rs. 91.97 lacs (Previous Year Rs. 179.32 lacs) paid under protest/deposit pending adjudication under Income tax Act, 1961 and Central Excise Act 1944.

(iv) Claims made by the employees whose services have been terminated are not acknowledged as debts, the exact liability, whereof is not ascertainable.

3 On 9th July, 2014, the European Commission decided to impose an unjustified fine of € 13.97 million, jointly and severally on the Company and its subsidiary Niche Generics Ltd contending that they had acted in breach of EU competition law as Niche Generics Ltd had, in early 2005 (when the Company was only a part owner and financial investor in Niche) had agreed to settle a financially crippling patent litigation with Laboratories Servier. The Company vehemently denies any wrongdoing on the part of either itself or Niche. Both the Company & Niche have submitted appeal in September 2014 to the EU General Court seeking appropriate relief in the matter.

4 Estimated amount of Contracts remaining to be executed (Net of Advances) on Capital & other account not provided forRs.13,747.56 lacs (Previous year Rs.11,735.38 lacs).

5 (a) Cash credit, Rs. NIL lacs (Previous Year Rs. 62.58 lacs) from Bank of India and Bank of Baroda are secured against hypothecation of Inventories, Book debts and an equitable mortgage of immovable properties located at Jogeshwari, Roha, Ghaziabad on a second, subject and subservient pari passu charge basis ( First charge holder being fully satisfied and paid.) In addition the cash credit facilities are also secured by an equitable mortgage of the Company''s immovable properties situated at Goa and Baddi on a second , subject and subservient basis. (First charge holder being fully satisfied and paid) (b)Loan from Biotechnology Industry Research Assistance Council is secured against hypothecation of movable properties including any and all equipment, apparatus machineries, machineries spares, tools and other accessories, goods and / or other moveable property , present & future, situated at Bio technology R&D Centre, Goa.

6 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium 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.

7 On internal assessment of long term strategic investments made by the company in its wholly owned subsidiaries, considering their performance, future expectations, cash flow generated and % the synergies in the operations from the said subsidiaries over the period of investments, the management has determined an amount of Rs. 434.55 lacs as diminution for the year (previous Year Rs 176.20 lacs) taking the accumulated provision to Rs. 1,303.77 lacs ( previous year : Rs. 869.22 lacs) on total investment made of Rs. 11,327.58 lacs (Investments before diminution & excluding preference shares held in subsidiaries ) and same is considered adequate by the management as at the balance sheet date.

8 Employee Benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on retirement / resignation or retirement under VRS at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy. The Company has a defined benefit obligation for Leave encashment which is partly funded. Generally the leave encashment is paid to employees in case of resignation, retirement under VRS or retirement except in some case the same is paid annually.

* As per Actuary Certificate

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority promotion and other relevant factors, such as supply and demand in the employment market. The discounting rate is based on material yield on government bonds having currency and terms consistent with the currency and terms of post-employment benefit obligations. The overall expected rate of return on assets is based on the LIC structure of interest rates on gratuity funds.

9 Operating lease:

Premises and certain vehicles are obtained on operating lease and are renewable and non-cancellable. There are no restrictions imposed by lease arrangements. The lease term is based on individual agreements. There are no sub-leases. The aggregate lease rentals payable, are charged as rent ( Refer Note no. 27 & 28 ) in the Statement of Profit & Loss.


Mar 31, 2013

1. Scheme of Amalgamation

The Hon''ble High Court of Mumbai, on July 12, 2012 sanctioned the scheme of amalgamation under Section 391 to 394 of the Companies Act,1956 of five Investment Companies (the primary assets of which comprise of equity shares in the Company) namely AVM Capital Services Private Limited (ACSPL), Chevy Capital Services Private Limited (CCSPL) , PM Capital Services Private Limited (PCSPL), Pranit Trading Private Limited (PTPL), Viramrut Trading Private Limited (VTPL), (collectively herein after referred to as ''Transferor Companies'') with the Company. The Scheme was earlier approved by the shareholders in the court-convened meeting held on November 3, 2011. The Company filed the Court Order with the Registrar of Companies on 6th August, 2012 to make the scheme effective in terms of said order dated 12th July 2012. ULL has given effect for the said Scheme in its books of accounts with effect from the appointed date i.e. 1st April 2011. In accordance with the Scheme, the Company has accounted for the Amalgamation based on the "Pooling of Interest" method as under:

(i) all assets and liabilities appearing in the books of accounts of Transferor Companies have been transferred to & vested in and have been recorded by the Company at their respective book values

(ii) the investments in equity share capital of the Company as it appeared in the books of account of the Transferor Companies is cancelled

(iii) the excess of net assets value of the Transferor Companies as reduced by the face value of shares issued by the Company, adjusted for cancellation of equity share capital as mentioned above and net of all expenses in relation to the Scheme, amounting to Rs. 1.62 lacs has been credited to Surplus in the Profit and Loss Account

(iv) all inter-company transactions have been eliminated on incorporation of the accounts of Transferor Companies in the books of Company

(v) in consideration of the above, the Company issued and allotted equity shares, credited as fully paid up, to the extent indicated below, to all the members of the Transferor Companies in the following proportion:

(a) 46,72,552 fully paid up equity shares of Rs. 2 each of the Company for every 1,000 paid up equity shares of Rs. 100 each held in ACSPL

(b) 78,43,811 fully paid up equity shares of Rs. 2 each of the Company for every 1,000 paid up equity shares of Rs. 100 each held in CCSPL

(c) 46,70,186 fully paid up equity shares of Rs. 2 each of the Company for every 1,000 paid up equity shares of Rs. 100 each held in PCSPL

(d) 1,09,36,087 fully paid up equity shares of Rs. 2 each of the Company for every 1,000 paid up equity shares of Rs. 100 each held in PTPL

(e) 17,13,547 fully paid up equity shares of Rs. 2 each of the Company for every 1,000 paid up equity shares of Rs. 100 each held in VTPL

Accordingly, 2,82,93,991 fully paid up equity shares of Rs. 2 each of the Company were issued to the shareholders of the Transferor Companies, which is equivalent to the shares cancelled, vide (ii) above; these shares, aggregating to Rs. 565.88 lacs, pending allotment were shown as "Share Capital pending allotment" under Share Capital, thus resulting in no change in the total issued & paid up Share Capital of the Company. The new equity shares issued as above rank pari-passu with the existing equity shares of the Company. As per the scheme of amalgamation, the said shares were issued & allotted to the shareholders of the transferor companies as per register of members of the transferor companies as on the effective date i.e. 6 th August, 2012.

2 During the previous year ended 31st March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company, for preparation and presentation of its financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also re-classified the previous year figures in accordance with the figures of the current year.

3 Contingent Liabilities :

(Rs. in lacs)

2012-13 2011-12

(i) Claims not acknowledged as debts*. 1,790.99 1,416.00

(ii) In respect of the Guarantees given to Bank on behalf of :

- Subsidiaries 2,102.10 2,397.15

(iii) Other money for which the company is Contingently liable 495.91 518.93

Total 4,389.00 4,332.08

* includes Rs. 96.44 lacs (Previous Year Rs. 88.20 lacs) paid under protest/deposit pending adjudication under Income tax Act,1961 and Central Excise Act 1944.

(iv) Claims made by the employees whose services have been terminated are not acknowledged as debts, the exact liability, whereof is not ascertainable.

4 Estimated amount of Contracts remaining to be executed (Net of Advances) on Capital & other account not provided for Rs. 9,124.58 lacs (Previous year Rs. 11,647.05 lacs).

5 Cash credit, Rs. 572.05 lacs (Previous Year Rs. 949.14 lacs) from Bank of India and Bank of Baroda are secured against hypothecation of Inventories, Book debts and mortgage of immovable properties located at Jogeshwari, Roha, Ghaziabad on first pari passu charge & on immovable properties at Goa and Baddi Unit I on a second and subservient charge.

Short Term unsecured borrowings Rs. Nil (Previous Year Rs. 1,538.15 lacs) represent Packing / Buyers credit in Foreign currency availed from various banks against export receivables. Maximum tenor of such borrowings is 6 months from the date of availment.

6 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium 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.

7 On internal assessment of long term investments made by the Company in its subsidiaries during the year, the management has determined an amount of Rs. 159.81 lacs (previous year Rs. 142.55 lacs) for diminution, which has been provided in the accounts.

8 Shareholders of the Company approved the sale of company''s unit at SEZ, Indore, Madhya Pradesh through a postal ballot. The results of the said ballot were announced on 29.03.2013. Majority of fixed assets in this unit are included under the head " Capital work in progress" (Refer Note no. 13)

The sale will be completed after receipt of certain necessary approvals.

9 The Company uses forward contracts to hedge its risk associated with foreign currency fluctuations relating to firm commitments and forecasted transactions. The Company does not enter into forward exchange contracts which are intended for speculative purpose.

10 Employee Benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on retirement / resignation or retirement under VRS at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The Company has a defined benefit obligation for Leave encashment which is partly funded. Generally the leave encashment is paid to employees in case of resignation, retirement under VRS or retirement except in some case the same is paid annually.

The following tables summarise the funded status and amounts recognised in the balance sheet for gratuity & leave encashment benefits.

11 Operating lease:

Premises and certain vehicles are obtained on operating lease and are renewable/cancellable at mutual consent. There are no restrictions imposed by lease arrangements. The lease term is based on individual agreements. There are no sub-leases. The aggregate lease rentals payable, are charged as rent (Refer Note no. 28 ) in the Statement of Profit & Loss.

12 The amount of Dividends proposed to be distributed to Equity shareholders for the FY. 2012-2013 includes dividend on shares allotted to employees as per ESOP Scheme of the company, after the Balance sheet but before record date, on which dividend is declared in Board Meeting. The total 13,750 nos. of shares are allotted after balance sheet date on which dividend of Rs. 4.50/- per share is declared and will be paid after approval of same in ensuing Annual General Meeting. Accordingly provision has been made for dividend distribution tax (DDT) on such dividend in F.Y. 2012-2013 Audited accounts.


Mar 31, 2010

1 Previous years figures have been regrouped, recast and restated wherever necessary.

2 Contingent Liabilities : (Rs. in lacs)

Current Year Previous Year

(i) Claims not acknowledged as debts*. 582.05 599.78

(ii) In respect of the Guarantees given to Bank on behalf of :

- Subsidiaries 1,214.20 1,352.60

- Others 169.67 185.33

(iii) Letters of Credit 140.75 441.70

Total 2,106.67 2,579.41

* includes Rs. 91.27 lacs (Previous Year Rs. 91.27 lacs) paid under protest/deposit pending adjudication. (iv) Claims made by the employees whose services have been terminated are not acknowledged as debts, the exact liability, whereof is not ascertainable.

2 Estimated amount of Commitments (Net of Advances) on Capital Account, not provided for Rs. 2,075.84 lacs (Previous year Rs. 1,225.96 lacs)

3 (i) External commercial borrowings (ECB) of Rs. Nil (Previous year? Nil) from Co-operative Centrale Raiffeisen

Boerenleenbank B.A., Singapore was secured by first pari-passu charge on Companys immovable properties at Goa and at Baddi Unit I. Company has filled necessary forms with ROC for satisfaction of charges. However related title deeds are pending collection. (ii) Cash credit, Packing credit and Demand loans of? 248.08 lacs (Previous year? 674.78 lacs) from Bank of India and Bank of Baroda are secured against hypothecation of Inventories, Book debts and mortgage of immovable properties located at Jogeshwari, Roha, Ghaziabad on first pari passu charge and on immovable properties at Baddi Unit I and Goa on a second and subservient charge.

4 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made. The above information regarding Micro, Small and Medium 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.

5 On internal assessment of long term investments made by the Company in its subsidiaries during the year, the management has determined an amount of? 72.00 lacs (Previous Year? 193.00 lacs) for diminution, which has been provided in the accounts.

6 Addition to Fixed Assets and Capital Work in Progress other than Land includes Rs. 202.82 lacs (Previous year Rs. 382.07 lacs) being expenditure of capital nature on Research & Developments.

7 Establishment & Administrative expenses include political contribution Rs. Nil (Previous Year Rs. 60.00 lacs to Nationalist Congress Party).

8 Debtors are secured to the extent of Initial Advance of Rs. 2,048.35 lacs (Previous Year Rs. 1,878.41 lacs) received from Distributors and Consignment Agents

9 The Company uses forward contracts to hedge its risk associated with foreign currency fluctuations relating to firm commitments and forecasted transactions. The Company does not enter into forward exchange contracts which are intended for speculative purposes.

10 Employee Benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The Company has a defined benefit unfunded obligation for leave encashment . Generally the leave encashment is paid to employees in case of retirement , resignation or retirement under except in some case the same is paid annually .

The following tables summarise the components of net benefit expense recognised in the Profit and Loss Account and the funded status and amounts recognised in the Balance Sheet for gratuity benefits.

11 Operating lease:

Premises and certain vehicles are obtained on operating lease and are renewable/cancellable at mutual consent. There are no restrictions imposed by lease arrangements. The lease term is based on individual agreements. There are no sub- leases. The aggregate lease rentals payable, are charged as rent (Refer Schedule 15) in the Profit & Loss Account.

12 The deferred tax liability for the current year amounting to Rs. 232.00 lacs (Previous year Rs. 10.00 lacs) & Excess / short provision for taxation of previous years accounted during the current year Rs. 32.63 lacs (Previous year Rs. 13.81 lacs) is shown in the Profit and Loss Account under Provision for Taxation.

13 Interim Dividend includes an amount of Rs. 2,524.82 lacs @ Rs. 7/- per share (face value of Rs. 5/- per share ) declared on 10th May, 2010 and paid on 21st May, 2010. Accordingly said amount along with Dividend Distribution Tax of Rs. 419.34 lacs is shown under Schedule-12 as provisions.

Information pursuant to the provisions of paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956 as certified by management.

14 Statement of Installed Capacities (as Certified by the Management) and Actual Production during the year.

a) Production Includes the Companys Products manufactured by others on Loan License basis, but does not include products manufactured by the Company on behalf of others*.

b) The capacity mentioned above is annual capacity based on maximum utilisation of plant and machinery based on existing product mix. Installed capacity may vary due to change in product mix.

c) Installed capacity as certified by management being a technical matter is relied upon by the auditors.



 
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