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Notes to Accounts of Unichem Laboratories Ltd.

Mar 31, 2017

* Transfer includes depreciation related to new projects under capitalization allocated to Capital Work in-Progress.

** Buildings include three Flats and a Garage amounting to Rs.147.19 lacs (Previous year Rs.147.19 lacs ) where the co-operative society is yet to be formed.

During the year ended 31st March 2017, Rs.497 lacs (31st March 2016 Rs.426 lacs) was recognized as an expenses for inventories carried at net realizable value.

Trade Receivables are secured to the extent of Advances of Rs.2014.59 lacs (Previous Year Rs.1930.77 lacs) received from Consignment Agents.& Others.

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 51)

In respect of the year ended March 31, 2017, the Board of Directors at its meeting held on May 30, 2017 recommended a dividend of Rs.3/- per share to be paid on its fully paid up equity shares having a face value of Rs.2/- . This equity dividend is subject to the approval of shareholders at the ensuing Annual General Meeting and has not been included as a liability in these standalone financial statements. The total estimated equity dividend (including tax on dividend ) to be paid is Rs.3,281.30 lacs.

The Company has taken term loan from BIRAC carrying interest at the rate of 2% per annum, repayment in 10 equal half yearly installments commencing from one year from the date of completion (14th oct, 2016). (Refer note No. 39 (b))

Using prevailing market rates for an equivalent loan of 10 %, the fair value of the loan at initial recognition is estimated at Rs.37.66 lacs. The difference of Rs.13.77 lacs between gross proceeds and the fair value of the loan is the benefit derived from the below market interest loan and is recognized as deferred revenue ( Note - 25). Interest expenses of Rs.1.55 lacs was recognized of the year ended 31st March 2016 and Rs. 4.19 lacs was recognized in 2016-17(Note 32).

The deferred revenue arise as a result of the benefit received from an below market interest government loan received on 1st Jan, 2015 and 5th March, 2016. The revenue was offset against finance cost incurred in FY 2015-16 and FY 2016-17.

* includes Rs.109.19 lacs (Previous Years ending - 31.03.2016 Rs.116.69 lacs and 31.03.2015 Rs.91.97 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.

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.19,908.77 lacs (Previous year ending as on 31.03.2016 is Rs.18,253.29 lacs and ending as on 31.03.2015 Rs.13,747.56 lacs).

3 (a) Cash credit, Rs.55.14 lacs ( Previous Year Rs.790.15 lacs) in Joint consortium from Bank of India and Bank of

Baroda are secured against hypothecation of Stocks and Book debts both present and future situated at various locations of the Company

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

(c) Credit facilities to overseas subsidiaries is agreed to be secured in favour of Citibank NA by:

(i) first exclusive charge on the movable fixed assets (including plant and machinery, office equipment, furniture & fixtures, etc. and excluding current assets, stores & spares) situated at Pithampur, Madhya Pradesh and Baddi, Himachal Pradesh and

(ii) first exclusive charge on immovable property situated at Pithampur, Madhya Pradesh and Baddi, Himachal Pradesh The process of creating the said charges are under process.

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 its investments in wholly owned subsidiaries. In respect of its investment in Unichem Pharmaceutical Do Brazil Ltd , Brazil , Impairment loss recognized for this investment for the year Rs.2,690.78 lacs compared to Rs.2,277.63 lacs made for the previous year ending as on 31.03.2016 and Rs.434.55 lacs as on 31.03.2015. This has resulted in the aggregate Impairment loss to Rs.6,272.19 lacs (previous year ending as on 31.03.2016 Rs.3,581.41 lacs and as on 31.03.2015 Rs.1,303.77 lacs) on a total investment of Rs.6,272.19 lacs (previous year ending as on 31.03.2016 Rs.5,695.88 lacs and as on 31.03.2015 Rs.5,116.27 lacs). Impairment loss for the current year charged to profit and loss after an internal assessment based on circumstances prevailing as at the balance sheet date, such as past performance, results, assets, expected cash flows, projections, status of product approvals, nature of the market and regulatory conditions.

6. Exceptional Items

Enactment of the payment of Bonus ( Amendment ) Act , 2015 having come into force effective 1st day of April 2014, the Company has made additional provision for Bonus pertaining for the period from 1st April 2014 to 31st March 2015 and has disclosed the same as an Exceptional item of Rs. 353 lacs before tax and accordingly the Profit and EPS after tax but before exceptional items would be as follows.

7. 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.

The following are the outstanding forward contracts :

8. Employee Benefits

Defined benefit plan

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 service cost and the net interest cost would be charged to the Profit & Loss account. Actuarial gains and losses arise due to difference in the actual experience and the assumed parameters and also due to changes in the assumptions used for valuation. The Company recognizes these remeasurements in the Other Comprehensive Income (OCI).

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.

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

3 In view of the Management , equity Investment in Synchron Research services Pvt Ltd will not result the investee company becoming a related party since there is no control over operations.

b) The total of future minimum sublease payment expected to be received under non - cancellable subleases at the end of reporting period is NIL

c) Lease payment s recognized as an expense in the period

d) A general description of lessee’s significant leasing arrangements including terms of use is as per the terms of arrangement is entered by the company

ii) The estimated fair value of each stock option granted in all the ESOS was calculated by Black & Scholes option pricing model. The following assumptions were used for calculation of fair value of grants :

Note:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.


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, 2012

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 Service Private Limited (ACSPL), Chevy Capital Service Private Limited (CCSPL), PM Capital Service 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 has 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 appears in the books of account of the Transferor Companies have been 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 shall issue and allot 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 ofRs. 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 ofRs. 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 ofRs. 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 ofRs. 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 ofRs. 100 each held in VTPL

Accordingly, 2,82,93,991 fully paid up equity shares of Rs. 2 each of the Company will be 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 have been 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 to be issued as above shall rank pari-passu with the existing equity shares of the Company. As per the scheme of amalgamation, the said shares will be 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. 6th August, 2012.

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.

2 During the 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)

2011-12 2010-11

(i) Claims not acknowledged as debts*. 1,416.00 684.03

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

- Subsidiaries 2,397.15 2,535.60

- Others 223.76 218.06

(iii) Letters of Credit 676.82 518.44

Total 4,713.73 3,956.13

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

(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 forRs. 11,647.05 lacs (Previous yearRs.8,208.84 lacs).

5 Cash credit and Packing credit ofRs. 949.14 lacs (Previous yearRs. 847.27 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 represent Packing / Buyers credit in Foreign currency availed from various banks against Export receivables and Import Letter of Credit. 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. 142.55 lacs (previous Year Rs. 125.66 lacs) for diminution, which has been provided in the accounts.

8 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.

9 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 VRS 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.

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.

10 Related Party Disclosures

As per AS-18 issued by the Institute of Chartered Accountants of India, the Company's related parties are as under:

1 Relationships

(i) Subsidiaries of the Company:

Niche Generics Limited

Unichem SA Pty Ltd.

Unichem Farmaceutica Do

Brasil Ltda

Unichem Pharmaceuticals

(USA) Inc

Unichem Laboratories Limited,

Ireland

(ii) Enterprises under significant influence of key management personnel:

Chevy Capital Services Pvt Ltd* PM Capital Services Pvt Ltd.* AVM Capital Services Pvt Ltd* Pranit Trading Pvt. Ltd* Viramrut Trading Pvt Ltd* Uni Distributors Pvt Ltd

(iii) Key Management personnel and their relatives:

Dr. Prakash A. Mody

(Chairman and Managing Director)

Mrs. Anita Mody

Ms. Supriya Mody

Ms. Suparna Mody

Ms Shwetambari Mody

* Scheme of amalgamation becoming effective from 01.04.2011(appointed date) consequent upon sanction from Hon'ble High Court of Mumbai, shares in the name of said companies will get cancelled and new shares will be issued to the shareholders of respective companies. (Refer Note no. 2) However considering the fact that Dividend was paid before effective date , the transactions are reflected hereunder in spite of cancellation of the shares on 01.04.2011.

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 F.Y. 2011-2012 includes dividend on shares alloted 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 126,625 nos. of shares are alloted after balance sheet date on which dividend of Rs. 3/- per share is declared and will be paid after approval of same in ensuing Annual General Meeting of Shareholders. Accordingly provision has been made for dividend distribution tax (DDT) on such dividend in F.Y. 2011-2012 Audited accounts.

13 Interim Dividend for the previous year included 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 was shown under "Short term Provisions" in previous year.


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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