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Notes to Accounts of Zydus Wellness Ltd.

Mar 31, 2023

Defined benefit plan and long term employment benefit A General description:

Leave wages [Long term employment benefit]:

The leave encashment scheme is administered through Life Insurance Corporation of India’s Employees’ Group Leave Encashment cum Life Assurance [Cash Accumulation] Scheme. The employees of the company are entitled to take leave as per the leave policy of the company. The liability on account of accumulated leave as on last day of the accounting year is recognised [net of the fair value of plan assets as at the balance sheet date] at present value of the defined obligation at the balance sheet date based on the actuarial valuation carried out by an independent actuary using projected unit credit method.

Gratuity [Defined benefit plan]:

The Company has a defined benefit gratuity plan. Every employee who has completed continuous services of five years or more gets a gratuity on death or resignation or retirement 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 plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary increment risk.

Investment risk:

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.

Interest risk:

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments.

Longevity risk:

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary risk:

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

Note: 26 - Contingent liabilities and commitments [to the extent not provided for]:

'' in Lakhs

Particulars

As at

March 31, 2023

As at

March 31, 2022

A Contingent liabilities:

a Other money for which the Company is contingently liable:

i In respect of Sales Tax and VAT matters pending before appellate authorities/ court which the Company expects to succeed, based on decisions of Tribunals/ Courts

667

667

- Net of advance of

7

7

ii In respect of Income Tax matters pending before appellate authorities which the Company expects to succeed, based on decisions of Tribunals/ Courts

32

- Net of advance of

72

34

B Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for

455

424

- Net of advance of

68

64

Note: 38 - Financial instruments:(i) Fair values hierarchy:

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: Quoted prices (unadjusted) in active markets for financial instruments.

Level 2 : The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data relying as little as possible on entity specific estimates. Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

(iii) Fair value of instruments measured at amortised cost:

Financial assets and liabilities measured at amortised cost for which fair values are disclosed.

Financial Assets: The carrying amounts of trade receivables, loans and other financial assets [other than investment in preference shares], cash and cash equivalents are considered to be the approximately equal to the fair values.

Financial Liabilities: Fair values of loans, other financial liabilities and trade payables are considered to be approximately equal to the carrying values. Fair values of investment in preference shares were calculated based on cash flows discounted using the applicable adjusted market interest rates.

(ii) Risk Management:

The Company’s activities expose it to market risk, liquidity risk and credit risk. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.

The Company’s risk management is done in close co-ordination with the board of directors and focuses on actively securing the Company’s short, medium and long-term cash flows by minimizing the exposure to volatile financial markets. Longterm financial investments are managed to generate lasting returns.

The Company does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Company is exposed are described below:

A. Credit risk:

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. The Company is exposed to credit risk from loans and advances to related parties, trade receivables, bank deposits and other financial assets. The Company periodically assesses the financial reliability of the counter party taking into account the financial condition, current economic trends, analysis of historical bad debts and ageing of accounts receivable. Individual customer limits are set accordingly.

i Investments at Amortised Cost : They are investments in the normal course of business of the company.

ii Bank deposits : The Company maintains its Cash and cash equivalents and Bank deposits with reputed and highly rated banks Hence, there is no significant credit risk on such deposits.

iii Loans to related parties : They are given for business purposes. The Company reassesses the recoverability of loans periodically. Interest recoveries from these loans are regular and there is no event of defaults.

iv Trade Receivable: The Company trades with recognized and credit worthy third parties. It is the Company’s policy that alt customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an on-going basis with the result that the Company’s exposure to bad debts is not significant.

v There are no significant credit risks with related parties of the Company. The Company is exposed to credit risk in the event of non-payment by customers. Credit risk concentration with respect to trade receivables is mitigated by the Company’s large customer base. Adequate expected credit losses are recognized as per the assessments. No single third party customer contributes to more than 10% of outstanding accounts receivable [excluding outstanding from subsidiaries] as at March 31, 2023 and March 31, 2022. The Company has used expected credit loss [ECL] model for assessing the impairment loss. For the purpose, the Company uses a provision matrix to compute the expected credit loss amount. The provision matrix takes into account external and internal risk factors and historical data of credit losses from various customers.

B Liquidity risk:

a Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the business, the Company maintains flexibility in funding by maintaining availability under committed facilities.

b Management monitors rolling forecasts of the Company liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which it operates. In addition, the Company’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

Maturities of financial liabilities :

The tables below analyse the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

C Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar and Other currency. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the Company’s functional currency. The Company’s operations in foreign currency creates natural foreign currency hedge. This results in insignificant net open foreign currency exposures considering the volumes and operations of the Company.

D Interest rate risk:

Liabilities:

The Company’s policy is to minimise interest rate cash flow risk exposures on long-term financing. As at March 31, 2023, the Company is exposed to changes in market interest rates through bank borrowings at variable interest rates. The Company’s investments in Fixed Deposits are at fixed interest rates.

E Price Risk (a) Exposure

The Company’s exposure to price risk arises from investments in equity and mutual funds held by the Company and classified in the balance sheet as fair value through OCI and at fair value through profit or loss respectively. To manage its price risk arising from investments in equity securities and mutual funds, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.

Note: 41 - Leases:Lessee:

A Relating to statement of financial position:

The Company previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all risk and rewards of ownership of the underlying asset to the Company. Under Ind AS 116, the Company recognises right to use assets and lease liabilities for most leases.

iii Mainly due to reduction in finance cost on account of full repayment of borrowings and increase in profitability.

iv Increase in profits mainly due to a) Increase in revenues; b) Lower advertisement spends; c) Recognition of deferred tax asset.

v Increase in revenues.

vi Mainly due to shorter payment cycles of certain raw materials.

vii Increase in investable funds due to greater fund flow on account of increase in profitability and therefore, higher returns.

Note: 43 - Disclosure of Transaction with Struck Off Companies

The Company did not have any material transaction with companies struck off under Section 248 of the Companies Act, 2013

or Section 560 of Companies Act, 1956 during the current and previous financial year.

Note: 44 -

[a] The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

[b] The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

Note: 45 -

Figures of previous reporting periods have been regrouped/ reclassified wherever necessary to correspond with the figures of

the current reporting period.


Mar 31, 2022

1 Legal titles of the immovable properties are in the name of the Company [excluding lease assets].

2 Additions of Nil [Previous Year: '' 12] Lakhs in research assets during the year are included in "Additions" under the respective heads of Gross Block of Property, plant and equipment and Intangible Assets.

[*] Includes right of use assets, Refer Note 41 for detailed breakup.

C. The Company offsets tax assets and Liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

D. The Company has tax losses of '' 23,342 Lakhs [March 31, 2021: '' 23,913 Lakhs] that are available for offsetting for indefinite period, except losses of '' 22,572 Lakhs which are available for offset for eight years against future taxable profits of the company in which the losses arose. Out of '' 22,572 Lakhs, majority of these losses will expire in March 2029. Unabsorbed Depreciation is allowed to be set-off for indefinite period.

Defined benefit plan and long term employment benefit A General description:

Leave wages [Long term employment benefit]:

The leave encashment scheme is administered through Life Insurance Corporation of India’s Employees’ Group Leave Encashment cum Life Assurance [Cash Accumulation] Scheme. The employees of the company are entitled to leave as per the leave policy of the company. The liability on account of accumulated leave as on last day of the accounting year is recognised [net of the fair value of plan assets as at the balance sheet date] at present value of the defined obligation at the balance sheet date based on the actuarial valuation carried out by an independent actuary using projected unit credit method.

Gratuity [Defined benefit plan]:

The Company has a defined benefit gratuity plan. Every employee who has completed continuous services of five years or more gets a gratuity on death or resignation or retirement 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 plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary increment risk.

Investment risk:

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.

Interest risk:

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments.

Longevity risk:

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary risk:

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

Note: 36 - Segment Information:

Segment Information has been given in the Consolidated Financial Statements of the Company. Hence, as per Ind AS-108 "Operating Segments" issued by the Ministry of Corporate Affairs, no separate disclosure on segment information is given in these financial statements.

(i) Fair values hierarchy:

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three Levels of a fair value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: Quoted prices (unadjusted) in active markets for financial instruments.

Level 2 : The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data relying as little as possible on entity specific estimates. Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

(iii) Fair value of instruments measured at amortised cost:

Financial assets and liabilities measured at amortised cost for which fair values are disclosed.

Financial Assets: The carrying amounts of trade receivables, loans and advances to related parties and other financial assets [other than investment in preference shares], cash and cash equivalents are considered to be the approximately equal to the fair values.

Financial Liabilities: Fair values of loans from banks, other financial liabilities and trade payables are considered to be approximately equal to the carrying values. Fair values of investment in preference shares were calculated based on cash flows discounted using the applicable adjusted market interest rates.

(ii) Risk Management:

The Company’s activities expose it to market risk, liquidity risk and credit risk. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.

The Company’s risk management is done in close co-ordination with the board of directors and focuses on actively securing the Company’s short, medium and long-term cash flows by minimizing the exposure to volatile financial markets. Longterm financial investments are managed to generate lasting returns.

The Company does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Company is exposed are described below:

A. Credit risk:

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. The Company is exposed to credit risk from loans and advances to related parties, trade receivables, bank deposits and other financial assets. The Company periodically assesses the financial reliability of the counter party taking into account the financial condition, current economic trends, analysis of historical bad debts and ageing of accounts receivable. Individual customer limits are set accordingly.

i Investments at Amortised Cost : They are investments in the normal course of business of the company.

ii Bank deposits : The Company maintains its Cash and cash equivalents and Bank deposits with reputed and highly rated banks Hence, there is no significant credit risk on such deposits.

iii Loans to related parties : They are given for business purposes. The Company reassesses the recoverability of loans periodically. Interest recoveries from these loans are regular and there is no event of defaults.

iv Trade Receivable: The Company trades with recognized and credit worthy third parties. It is the Company’s policy that alt customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an on-going basis with the result that the Company’s exposure to bad debts is not significant.

v There are no significant credit risks with related parties of the Company. The Company is exposed to credit risk in the event of non-payment by customers. Credit risk concentration with respect to trade receivables is mitigated by the Company’s large customer base. Adequate expected credit losses are recognized as per the assessments. No single third party customer contributes to more than 10% of outstanding accounts receivable [excluding outstanding from subsidiaries] as at March 31, 2022 and March 31, 2021. The Company has used expected credit loss [ECL] model for assessing the impairment loss. For the purpose, the Company uses a provision matrix to compute the expected credit loss amount. The provision matrix takes into account external and internal risk factors and historical data of credit losses from various customers.

B Liquidity risk:

a Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the business, the Company maintains flexibility in funding by maintaining availability under committed facilities.

b Management monitors rolling forecasts of the Company liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which it operates. In addition, the Company’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

C Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar, EUR and Other currency. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the Company’s functional currency. The Company’s operations in foreign currency creates natural foreign currency hedge. This results in insignificant net open foreign currency exposures considering the volumes and operations of the Company.

a Foreign currency risk exposure:

The Company’s exposure to foreign currency risk at the end of the reporting period expressed as follows: Sensitivity

The sensitivity of profit or loss and equity to changes in the exchange rates arises mainly from foreign currency denominated financial instruments.

E Price Risk (a) Exposure

The Company’s exposure to price risk arises from investments in equity and mutual funds held by the Company and classified in the balance sheet as fair value through OCI and at fair value through profit or loss respectively. To manage its price risk arising from investments in equity securities and mutual funds, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.

Note 40: Capital management:

The Company’s capital management objectives are

- to ensure the Company’s ability to continue as a going concern

- to provide an adequate return to shareholders

- to maintain an optimal capital structure to reduce the cost of capital.

Management assesses the Company’s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. This takes into account the subordination levels of the Company various classes of debt. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

Note: 41 - Leases:Lessee:

A Relating to statement of financial position:

The Company previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all risk and rewards of ownership of the underlying asset to the Company. Under Ind AS 116, the Company recognises right to use assets and lease liabilities for most leases.

Right of use assets are part of financial statement caption "Property plant and equipment’. Depreciation and impairment is similar to measurement of owned assets. Interest is part of financial statement caption "Finance cost".

Notes

i The Company had redeemed secured Non-convertible debentures (NCDs) due to which the finance cost and premium paid on redemption in financial year ended March 31, 2021 was not applicable during financial year ended March 31, 2022, this resulting into variances in ratio as reported above.

ii During the financial year ended March 31, 2022, there had been a significant increase in the net sales on account of low base in previous financial year due to Covid correspondingly total purchase, average trade receivables and average trade payables increased when compared to the previous year financial year, this resulting into variances in ratio as reported above.

iii During the financial year ended March 31,2022, due to increase in price of certain raw materials margins have been impacted, this resulted into variances in ratio as reported above.

iv During the year ended March 31, 2022, pursuant to the trademark license agreement entered into between the Company and ZWPL, the Company has recognized royalty income.

v There was no mutual fund investments as at March 31, 2021 and March 31, 2020.

Note: 43 : COVID-19 Impact:

The World Health Organisation [WHO] declared Covid-19 to be a global pandemic in March 2020. Majority of the countries across the globe were into full or partial lockdown situation, impacting business operations across various sectors with severe restrictions on movement of people and goods.

The Company has implemented several initiatives across its manufacturing and other business locations including allowing work from homes, social distancing at work places and proper sanitization of work places etc. for ensuring safety of its employees and continuity of its business operations with minimal disruption.

As per our current assessment of the situation based on internal and external information available up to the date of approval of these financial results by the Board of Directors, the Company believes that the impact of Covid-19 on its business, assets, internal financial controls, profitability and liquidity, both present and future, would be limited and there is no indication of any material impact on the carrying amounts of inventories, goodwill, intangible assets, trade receivables, investments and other financial assets. The eventual outcome of the impact of the global health pandemic may be different from those estimated as on the date of approval of these financial statements and the Company will closely monitor any material changes to the economic environment and their impact on its business in the times to come.

Note: 44: Disclosure of Transaction with Struck Off Companies

The Company did not have any material transaction with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the current and previous financial year.

[a] The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

[b] The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

Note: 46:

Figures of previous reporting periods have been regrouped/ reclassified wherever necessary to correspond with the figures of the current reporting period.


Mar 31, 2019

Note: 1 - Company overview:

Zydus Wellness Limited (“the Company”) was incorporated on November 1, 1994 and operates as an integrated consumer company with business encompassing the entire value chain in the development, production, marketing and distribution of health and wellness products. The product portfolio of the Company includes brands like Sugar free, Everyuth and Nutralite. The Company’s shares are listed on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). The registered office of the company is located at House no. 6 & 7, Sigma Commerce Zone, Near Iscon Temple, Sarkhej-Gandhinagar Highway, Ahmedabad, Gujarat - 380015. These financial statements were authorised for issue in accordance with a resolution passed by Board of Directors at its meeting held on May 28, 2019.

Defined benefit plan and long term employment benefit A General description:

Leave wages (Long term employment benefit):

The leave encashment scheme is administered through Life Insurance Corporation of India’s Employees’ Group Leave Encashment cum Life Assurance (Cash Accumulation) Scheme. The employees of the company are entitled to leave as per the leave policy of the company. The liability on account of accumulated leave as on last day of the accounting year is recognised (net of the fair value of plan assets as at the balance sheet date) at present value of the defined obligation at the balance sheet date based on the actuarial valuation carried out by an independent actuary using projected unit credit method.

Gratuity (Defined benefit plan):

The Company has a defined benefit gratuity plan. Every employee who has completed continuous services of five years or more gets a gratuity on death or resignation or retirement 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 expected contributions for Defined Benefit Plan for the next financial year will be in line with FY 2018-19.

The average duration of defined benefit plan obligation at the end of the year is 23.99 (as at March 31, 2018 : 23.98 year).

Sensitivity analysis:

A quantitative sensitivity analysis for significant assumption as is as shown below:

Note: 2 - Deferred Tax:

A Break up of Deferred Tax Liabilities and Assets into major components of the respective balances are as under:

B The Net Deferred Tax Expenses of Rs. (8) [Previous Year: Rs. (38)] Lakh for the year has been debited/ credited in the Statement of Profit and Loss.

C The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

The major components of income tax expense for the years ended March 31, 2019 and March 31, 2018 are :

(*) Security and Terms of Repayment for Secured Borrowings:

Working Capital Loan which is in the form of overdraft facility is secured by fixed deposits placed by the company with the bank. The value of such Fixed deposits classified under current asset as at March 31, 2019 is Rs.2380 Lakh (as at March 31, 2018: Rs. NIL). The outstanding amount of loan as at March 31, 2019 is Rs.2150 Lakh (as at March 31, 2018: Rs. NIL).

(**) Terms of Repayment for Unsecured Borrowings:

Working capital loans which are repayable on demand. The outstanding amount of loan as at March 31, 2019 is Rs.4,500 (as at March 31, 2018: Rs.2,500) Lakh.

Note: 3 - Dividend :

The Board of Directors, at its meeting held on May 28, 2019, recommended the final dividend of Rs.5 per equity share of Rs.10/- each. The recommended dividend is subject to the approval of the shareholders at the ensuing Annual General Meeting.

Note: 4 - Segment Information:

Segment Information has been given in the Consolidated Financial Statements of the Company. Hence, as per Ind AS-108 “Operating Segments” issued by the Institute of Chartered Accountants of India, no separate disclosure on segment information is given in these financial statements.

Note: 5 - Financial instruments:

Financial instruments

(i) Fair values hierarchy:

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three Levels of a fair value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1 : quoted prices (unadjusted) in active markets for financial instruments.

Level 2 : The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data rely as little as possible on entity specific estimates.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

(ii) Financial assets and liabilities measured at fair value - recurring fair value measurements:

(iii) Fair value of instruments measured at amortised cost:

Financial assets and liabilities measured at amortised cost for which fair values are disclosed.

Financial Assets:

The carrying amounts of borrowings, interest accured but not due, investment, trade receivables, trade payables, capital creditors, Security Deposits and cash and cash equivalents are considered to be the same as their fair values.

Financial Liabilities:

Fair values of loans from banks, other financial liabilities and trade payables are considered to be approximately equal to the carrying values.

(ii) Risk Management

The company’s activities expose it to market risk, liquidity risk and credit risk. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.

The Company’s risk management is managed in close cooperation with the board of directors and focuses on actively securing the Company’s short to medium-term cash flows by minimizing the exposure to volatile financial markets. Long-term cash flows by minimizing the exposure to volatile financial markets. Long-term financial investments are managed to generate lasting returns.

The Company does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Company is exposed are described below:

A Credit risk

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. The Company is exposed to credit risk from trade receivables, bank deposits and other financial assets. The Company periodically assesses the financial reliability of the counter party taking into account the financial condition, current economic trends, analysis of historical bad debts and ageing of accounts receivable. Individual customer limits are set accordingly.

Investments at Amortised Cost : They are strategic investments in the normal course of business of the company.

Bank deposits : The company maintains its Cash and cash equivalents and Bank deposits with reputed and highly rated banks Hence, there is no significant credit risk on such deposits.

Loans to related parties : They are given for business purposes. The Company reassesses the recoverability of loans periodically. Interest recoveries from these loans are regular and there is no event of defaults.

Trade Receivable: The Company trades with recognized and credit worthy third parties. It is the Company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an on-going basis with the result that the Company’s exposure to bad debts is not significant. Also the company does not enter into sales transaction with customers having credit loss history. There are no significant credit risks with related parties of the Company. The Company is exposed to credit risk in the event of non-payment by customers. Credit risk concentration with respect to trade receivables is mitigated by the Company’s large customer base. Adequate expected credit losses are recognized as per the assessments.

The history of trade receivables shows an allowance for bad and doubtful debts of Rs. NIL (Nil as at March 31, 2018). The Company has made allowance of Rs. NIL (Previous Year- Rs. NIL), against trade receivables of Rs.629 Lakh (Previous year - Rs.104 Lakh).

B Liquidity risk

a Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the business, the Company maintains flexibility in funding by maintaining availability under committed facilities.

b Management monitors rolling forecasts of the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company account the liquidity of the market in which the entity operates. In addition, the Company’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

Maturities of financial liabilities :

The tables below analyse the company’s financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

C Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar.Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the Company’s functional currency.The Company’s operations in foreign currency is insignificant and hence there is no material risk.

a Foreign currency risk exposure:

Sensitivity

The sensitivity of profit or loss and equity to changes in the exchange rates arises mainly from foreign currency denominated financial instruments.

b Interest rate risk

Liabilities*:

The Company’s policy is to minimise interest rate cash flow risk exposures on long-term financing. As at March 31, 2019, the Companyis exposed to changes in market interest rates through bank borrowings at variable interest rates. The Company’s investments in Fixed Deposits are at fixed interest rates.

c Price Risk

(a) Exposure

The company’s exposure to price risk arises from investments in equity and mutual fund held by the company and classified in the balance sheet as fair value through OCI and at fair value through profit or loss respectively to manage its price risk arising from investments in equity securities and mutual fund, the company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the company.

(b) Sensitivity- Mutual Fund (*)

The table below summarises the impact of increases/decreases of the index on the company’s equity and profit for the period. The analysis is based on the assumption that the price of the instrument has increased by 2% or decreased by 2% with all other variables held constant.

2 Capital management

The Company’ s capital management objectives are

- to ensure the Company’s ability to continue as a going concern

- to provide an adequate return to shareholders

- maintain an optimal capital structure to reduce the cost of capital.

Management assesses the Company’s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. This takes into account the subordination levels of the Company’s various classes of debt. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

Loan covenants

The Company has taken loan for working capital requirement and Long Term borrowings and as at March 31, 2019, the ratio of financial indebtness net of cash and cash equivalents to the Shareholder’s Fund is 0.46 [ March 31, 2018 (-0.74)] and Interest Service Coverage Ratio is 4.25 (March 31, 2018 : 85.19).

Note: 6

Figures of previous reporting periods have been regrouped/ reclassified wherever necessary to correspond with the figures of the current reporting period.


Mar 31, 2017

Defined benefit plan and long term employment benefit A General description:

Leave wages [Long term employment benefit]:

The leave encashment scheme is administered through Life Insurance Corporation of India''s Employees'' Group Leave Encashment cum Life Assurance [Cash Accumulation] Scheme. The employees of the company are entitled to leave as per the leave policy of the company. The liability on account of accumulated leave as on last day of the accounting year is recognized [net of the fair value of plan assets as at the balance sheet date] at present value of the defined obligation at the balance sheet date based on the actuarial valuation carried out by an independent actuary using projected unit credit method.

Gratuity [Defined benefit plan]:

The Company has a defined benefit gratuity plan. Every employee who has completed continuous services of five years or more gets a gratuity on death or resignation or retirement 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 offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority. The Company has tax losses which arose in India of INR 357 Lakhs (March 31, 2016: INR Nil, April 1, 2015 INR 218 Lakhs) that are available for offsetting for eight years against future taxable profits of the companies in which the losses arose. Majority of these losses are allowed to be carry forward for indefinite period.

Deferred tax assets have not been recognized in respect of these losses as they may not be used to offset taxable profits elsewhere in the Company and there are no other tax planning opportunities or other evidence of recoverability in the near future. If the Company was able to recognize all unrecognized deferred tax assets, the profit would increase by INR 110 Lakhs and MAT credit not recognized as at March 31, 2017 is INR 78 Lakhs eligible for set-off upto 15 years from the year in which the same arises.

1- Segment INFoRMATIoN:

Segment Information has been given in the Consolidated Financial Statements of the Company. Hence, as per Ind AS-108 "Operating Segments” issued by the Institute of Chartered Accountants of India, no separate disclosure on segment information is given in these financial statements.

2. Risk Management

The company''s activities expose it to market risk, liquidity risk and credit risk. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related impact in the financial statements.

The Company''s risk management is managed in close cooperation with the board of directors and focuses on actively securing the Company''s short to medium-term cash flows by minimizing the exposure to volatile financial markets. Long-term cash flows by minimizing the exposure to volatile financial markets. Long-term financial investments are managed to generate lasting returns.

The Company does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Company is exposed are described below:

3. Credit risk

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. The company is exposed to credit risk from trade receivables, bank deposits and other financial assets. The Company periodically assesses the financial reliability of the counter party taking into account the financial condition, current economic trends, analysis of historical bad debts and ageing of accounts receivable. Individual customer limits are set accordingly.

Bank deposits: The company maintains its Cash and cash equivalents and Bank deposits with reputed and highly rated banks Hence, there is no significant credit risk on such deposits.

Trade receivable: The Company trades with recognized and credit worthy third parties. It is the Company''s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an on-going basis with the result that the Company''s exposure to bad debts is not significant. Also the company does not enter into sales transaction with customers having credit loss history. There are no significant credit risks with related parties of the Company. The Company is exposed to credit risk in the event of non-payment by customers. Credit risk concentration with respect to trade receivables is mitigated by the Company''s large customer base. Adequate expected credit losses are recognized as per the assessments.

The history of trade receivables shows an allowance for bad and doubtful debts of INR 0.3 Lakhs as at March 31, 2017. The Company has made allowance of INR Nil [Previous Year- INR Nil], against trade receivables of INR 46 Lakhs [Previous year - INR 27 Lakhs].

4. Liquidity risk

5. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the business, the Company maintains flexibility in funding by maintaining availability under committed facilities.

6. Management monitors rolling forecasts of the Company''s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company account the liquidity of the market in which the entity operates. In addition, the Company''s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

Maturities of financial liabilities :

The tables below analyze the company''s financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

7. Interest rate risk Assets

The company''s fixed deposits are carried at amortized cost and are fixed rate deposits. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

8. Price risk

9. Exposure

The company''s exposure to price risk arises from investments in equity and mutual fund held by the company and classified in the balance sheet as fair value through OCI and at fair value through profit or loss respectively to manage its price risk arising from investments in equity securities and mutual fund, the company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the company.

10. Sensitivity-Mutual Fund

The table below summarizes the impact of increases / decreases of the index on the company''s equity and profit for the period. The analysis is based on the assumption that the price of the instrument has increased by 2% or decreased by 2% with all other variables held constant.

11. Capital management

The Company'' s capital management objectives are

- to ensure the Company''s ability to continue as a going concern

- to provide an adequate return to shareholders

- to maintain an optimal capital structure to reduce the cost of capital

Management assesses the Company''s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. This takes into account the subordination levels of the Company''s various classes of debt. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. The company has sufficient Cash and Cash Equivalents and Short Term Fixed Deposit available against the debt.

Loan covenants

The Company has taken loan for working capital requirement and as at March 31, 2017, the ratio of net finance cost to EBITDA was 0.42% (March 31, 2016 0.05%).

12- FIRST TIME ADOPTION OF IND AS:

The accounting policies set out in the note here have been applied in preparing the financial statements for the year ended March 31, 2017, the comparative information presented in these financial statements for the year ended March 31, 2016 and in the preparation of an opening Ind AS balance sheet at April 1, 2015 [the Company''s date of transition].

In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies [Accounting Standards] Rules, 2006 [as amended] and other relevant provisions of the Act [Indian GAAP]. An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following notes.

Exemptions and exceptions availed:

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from Indian GAAP to Ind AS.

13. Deemed cost:

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the Indian GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their Indian GAAP carrying values.

14. Leases:

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material. The Company has elected to apply this exemption for such contracts / arrangements.

15. Designation of previously recognized financial instruments:

Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances at the date of transition to Ind AS. The Company has elected to apply this exemption for its investment in equity investments [other than investment in subsidiary].

16. Estimates:

An entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with Indian GAAP [after adjustments to reflect any difference in accounting policies], unless there is objective evidence that those estimates were in error.

Ind AS estimates as at April 1, 2015 are consistent with the estimates as at the same date made in conformity with Indian GAAP. The Company made estimates in accordance with Ind AS at the date of transition as these were not required under Indian GAAP.

17. Classification and measurement of financial assets:

As per the requirement of Ind AS 101, the Company has assessed the classification of financial assets on the basis of facts and circumstances that existed at the date of transition to Ind AS.

18. De- reorganization of financial assets and liabilities:

Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition

19- FIRST TIME ADOPTION OF IND AS: (contd.)

requirements in Ind AS 109 retrospectively from a date of the entity''s choosing, provided that the information needed to apply Ind AS 109 to financial assets or financial liabilities derecognized as a result of past transactions was obtained at the time of initially accounting for those transactions. The Company has elected to apply the de-recognition provision of Ind AS 109 prospectively from the date of transition to Ind AS.

20. Fair Valuation adjustments for financial assets and Fair valuation of investments in Mutual Funds

Under IGAAP, security deposit given to landlord for operating lease are shown at transaction price. Under Ind AS, such transactions are discounted to their present value using incremental borrowing rate applicable to the borrower entity. The difference between the carrying value of the security deposit and its present value is accounted as differed rental expenditure grouped under loans & advances. The unwinding of discount from the date of security deposit to the transition date is shown as rental expense and recognized in "Retained earnings”. Under previous GAAP, investment in mutual funds, being current investments, were accounted at the lower of cost or fair value. Under Ind AS, mutual funds are not equity instruments and the cash flows do not represent solely payments for principal and interest and hence are to be accounted at fair value through profit and loss.

21 proposed dividend including Corporate dividend tax: Under previous GAAP, dividend on equity shares recommended by the Board of Directors after end of the reporting period but before the date of approval of financial statements was considered as an adjusting event and consequently, provision for proposed dividend was recognized as a liability in the financial statements in the reporting period relating to which dividend was proposed. Under Ind AS, such dividend is recognized in the reporting period in which the same is approved by the members in a general meeting. Consequently, the impact of INR 2,821 Lakhs has been recognized in retained earnings at the transition date.

22. actuarial loss on defined benefit plan:

Under previous GAAP, re-measurement of defined benefit plans (gratuity), arising primarily due to change in actuarial assumptions was recognized as employee benefits expense in the Statement of Profit and Loss. Under Ind AS, such re-measurement (excluding the net interest expenses on the net defined benefit liability) of defined benefit plans is recognized in OCI. Consequently, the related tax effect of the same is also recognized in OCI. For the year ended March 31, 2016, re-measurement of gratuity liability resulted in a actuarial loss of INR 16 Lakhs which has now been reduced from employee benefits expense in the Statement of Profit and Loss and recognized separately in OCI. The above changes do not affect Equity as at date of transition to Ind AS and as at March 31, 2016.

others: Sale of goods:

Under The IGAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses.

other comprehensive income:

Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as other comprehensive income include re-measurements of defined benefit plans and fair value gains or (losses) on FVOCI equity instruments and corresponding tax impact thereon. The concept of other comprehensive income did not exist under previous GAAP.

Statement of cash flows:

The transition from IGAAP to Ind AS has not had a material impact on the statement of cash flows.


Mar 31, 2016

Note : 1 - Long Term Provisions:

Disclosure pursuant to Accounting Standard - 15 [Revised] "Employee Benefits":

Defined benefit plan and long term employment benefit

A General description:

Leave wages [Long term employment benefit]:

The Leave encashment scheme is administered through Life Insurance Corporation of India''s "Employees'' Group Leave Encashment-cum-Life Assurance [Cash Accumulation] Scheme". The employees of the Company are entitled to leave as per the leave policy of the Company. The liability on account of the accumulated leave as on last day of the accounting year is recognised [net of the fair value of plan assets as at the balance sheet date] at the present value of the defined obligation at the balance sheet date based on the actuarial valuation carried out by an independent actuary using projected unit credit method.

Gratuity [Defined benefit plan]:

The Company has a defined benefit gratuity plan. Every employee who has completed continuous services of five years or more, gets a gratuity on death or resignation or retirement 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.

Note : 2

a Effective from April 1, 2014, the Company had started providing depreciation on tangible assets on "straight line method" over the revised remaining useful lives of the tangible assets in alignment with useful lives prescribed in Schedule II to the Companies Act, 2013. Consequently, the depreciation charge for the year ended March 31, 2015 was higher by Rs. 196 Lacs. Further, an amount of Rs. 19 Lacs had been recognised in the opening balance of retained earnings which relate to the carrying amount of tangible assets whose revised remaining useful life was Nil as at April 1, 2014.

b Additionally, an amount of Rs. 7 Lacs had been recognised in the opening balance of retained earnings, which relate to the carrying amount of tangible assets of Zydus Wellness-Sikkim (the firm), whose revised remaining useful life was Nil as on April 1, 2014 and which had been adjusted against the current capital of the Company in the firm.

Note : 3

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


Mar 31, 2015

I. Company overview:

Zydus Wellness Limited ["the Company"] was incorporated on November 1,1994 and operates as an integrated consumer company with business encompassing the entire value chain in the development, production, marketing and distribution of health and wellness products. The product portfolio of the Company includes brands like Sugar free, Everyuth and Nutralite. The Company''s shares are listed on the National Stock Exchange of India Limited [NSE] and Bombay Stock Exchange Limited [BSE].

INR - Lacs As at March 31 2015 2014

Note : 2 - Contingent Liabilities and Commitment [to the extent not provided for]:

A Contingent Liabilities:

a Claims against the Company not acknowledged as debts 20 20

b In respect of guarantees given by Banks and/ or counter guarantees given by the Company 3 2

c Other money for which the Company is contingently liable:

i In respect of Sales Tax matters pending before appellate authorities 77 88

ii In respect of Income Tax matters pending before appellate authorities 194 193

B Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for [Net of Advances] 28 23

Note : 3 - Segment Information:

The Company operates in one segment only, namely "Consumer Products." The Company also exports its products to other countries. However the value being below threshold limit prescribed under Accounting Standard [AS] 17-"Segment Reporting", the reporting is not required.

Note : 4

a Effective from April 1, 2014, the Company has started providing depreciation on tangible assets on "straight line method" over the revised remaining useful lives of the tangible assets in alignment with useful lives prescribed in Schedule II to the Companies Act, 2013.

Consequently, the depreciation charge for the year ended March 31, 2015 is higher by Rs. 196 Lacs. Further, an amount of Rs. 19 Lacs has been recognised in the opening balance of retained earnings which relate to the carrying amount of tangible assets whose revised remaining useful life was Nil as at April 1, 2014.

b Additionally, an amount of Rs. 7 Lacs has been recognised in the opening balance of retained earnings, which relate to the carrying amount of tangible assets of Zydus Wellness-Sikkim (the firm), whose revised remaining useful life was Nil as on April 1, 2014 and which has been adjusted against the current capital of the Company in the firm.

Note : 5

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


Mar 31, 2013

1. Company Overview:

Zydus Wellness Limited ["the Company"] was incorporated on November 1, 1994 and operates as an integrated consumer company with business encompassing the entire value chain in the development, production, marketing and distribution of health and wellness products. The product portfolio of the Company includes brands like Sugar free, Everyuth, Nutralite and Actilife. The Company''s shares are listed on the National Stock Exchange of India Limited [NSE] and Bombay Stock Exchange Limited [BSE]. The Registered Office of the company is situated at Zydus Tower, Satellite Cross Roads, Sarkhej-Gandhinagar Highway, Ahmedabad-380015.

Note : 2 - Interim Dividend:

The Board of Directors, at its meeting held on May 13, 2013, declared an interim dividend of Rs.6/- per equity share of Rs. 10/- each.

Note : 3 - Segment Information:

The company operates in one segment only, namely "Consumer Products." During the year, the Company has started exporting its products to other countries. However the value being below threshold limit prescribed under Accounting Standard (AS)-17- "Segment Reporting", the reporting is not required.

Note : 4 - Related Party Transactions:

A Name of the Related Parties and Nature of the Related Party Relationship: a Holding Company: Cadila Healthcare Limited b Partnership Firm: M/s. Zydus Wellness - Sikkim c Fellow Subsidiaries/Concerns:

Dialforhealth India Limited Zydus Pharmaceuticals (USA) Inc. [USA]

Dialforhealth Unity Limited Nesher Pharmaceuticals (USA) LLC [USA]

Dialforhealth Greencross Limited Zydus Healthcare (USA) LLC [USA]

German Remedies Limited Zydus Noveltech Inc. [USA]

Zydus Pharmaceuticals Limited Hercon Pharmaceuticals LLC [USA]

Zydus Animal Health Limited Zydus Healthcare S.A. (Pty) Ltd [South Africa]

Liva Healthcare Limited Simayla Pharmaceuticals (Pty) Ltd

[South Africa]

Zydus Technologies Limited Script Management Services (Pty) Ltd

[South Africa]

Biochem Pharmaceutical Industries Limited Zydus Nikkho Farmaceutica Ltda. [Brazil]

M/s. Zydus Healthcare, a Partnership Firm Zydus Pharma Japan Co. Ltd. [Japan]

Zydus Lanka (Private) Limited [Sri Lanka] Laboratorios Combix S.L. [Spain]

c Fellow Subsidiaries/Concerns:

Zydus International Private Limited [Ireland] Zydus Pharmaceuticals Mexico SA De CV

[Mexico]

Zydus Netherlands B.V. [the Netherlands] Zydus Pharmaceuticals Mexico Services

Company SA De C.V.[Mexico]

Zydus France, SAS [France] ZAHL B.V. [the Netherlands]

Etna Biotech S.R.L. [Italy] Bremer Pharma GmbH [Germany]

ZAHL Europe B.V. [the Netherlands] d Key Management Personnel:

Mr. Elkana Ezekiel - Managing Director

Note : 5

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


Mar 31, 2012

Defined benefit plan and long term employment benefit A General description:

Leave wages [Long term employment benefit]:

The Leave encashment scheme is administered through Life Insurance Corporation of India's "Employees' Group Leave Encashment-cum-Life Assurance [Cash Accumulation] Scheme". The employees of the Company are entitled to leave as per the leave policy of the Company. The liability on account of the accumulated leave as on last day of the accounting year is recognised [net of the fair value of plan assets as at the balance sheet date] at the present value of the defined obligation at the balance sheet date based on the actuarial valuation carried out by an independent actuary using projected unit credit method.

Gratuity [Defined benefit plan]:

The Company has a defined benefit gratuity plan. Every employee who has completed continuous services of five years or more, gets a gratuity on death or resignation or retirement 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.

Note : 18 - Contingent Liabilities and commitment [to the extent not provided for]:

A Contingent Liabilities:

a Claims against the Company not acknowledged as debts. 20 20

b Other money for which the company is contingently liable:

i In respect of Sales Tax matters pending before appellate authorities. 55 61

ii In respect of Income Tax matters pending before appellate authorities. 165 119

c In respect of guarantees given by Banks and/or counter guarantees given by the Company. 2 2

d The company has imported certain capital equipment at concessional rate of custom duty under "Export Promotion Capital Goods Scheme" of the Central Government. The Company has undertaken an export obligation to the extent of US $ 30.29 Lacs [equivalent to Rs. 1540 Lacs approx. {Previous Reporting Period US $ 30.29 Lacs (Equivalent to Rs. 1350 Lacs)}] to be fulfilled during a specified period as applicable from the date of imports. 155 155

B Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for [Net of Advances]. 31 83

Note : 1 - Segment Information:

The company operates in one segment only, namely "Consumer Products." The Company has only one plant located in Gujarat and the company sells its products in India. Hence, there is no geographical segment also. Therefore, the segment reporting is not applicable.

Note : 2

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


Mar 31, 2011

1 Previous year’s figures have been regrouped and rearranged wherever necessary to make it comparable with the current year’s figures.

2 The company has taken various office premises / godowns under operating lease or leave and license agreement. The lease terms in respect of such premises are on the basis of individual agreements entered into with the respective landlords. The company has given refundable interest free security deposits in accordance with the agreed terms. The lease payments are recognised in the Profit & Loss Account under “ Rent “ in Schedule -14.

3 The company has imported certain capital equipments at concessional rate of custom duty under “Export Promotion Capital Goods scheme” of the Central Government .The Company has undertaken an export obligation to the extent of US $ 30.29 Lacs [ equivalent to Rs. 1350 Lacs approx. { Previous Year US $ 30.29 Lacs ( Equivalent to Rs.1360 Lacs ) } ] to be fulfilled during a specified period as applicable from the date of imports. The liability towards customs duty payable thereon in respect of unfulfilled export obligation as on March 31, 2011 of Rs. 155 Lacs [ as at 31-03-10 : Rs.155 Lacs ] is not provided for.

4 Contingent Liabilities not provided for in respect of :

INR - Lacs Year ended March 31, 2011 2010

A Claims against the Company not acknowledged as debts 20 22

B Sales Tax matters pending in appeals 61 6 C Income Tax matters pending in appeals 119 0 D Guarantees given by a bank and counter guarantees given by the company 2 0

5 During the Year, the Company has paid to Bharatiya Janta Party, Contribution of Rs. 100 lacs, pursuan to provision of Section 293A of the Companies Act, 1956.

6 Segment Information :

The company operates in one segment only, namely “Consumer Products.” The Company has only on plant located in Gujarat and the company sells its products in India. Hence, there is no geographica segment also. Therefore, the segment reporting is not applicable.

7 Micro, Small and Medium Enterprises : A Under the Micro, Small and Medium Enterprises Development Act, 2006, [ MSMED ] which came into force from October 2, 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises.

INR - Lacs Year ended March 31, 2011 2010

- Principal amount remaining unpaid to any supplier as at the year end 0 0

- Interest due thereon 0 0

- Amount of interest paid by the Company in terms of section 16 of the MSMED, along with the amount of the payment made to the supplier beyond the appointed day during the accounting year 0 0

- Amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the MSMED 0 0

- Amount of interest accrued and remaining unpaid at the end of the accounting year 0 0

B The above information has been compiled in respect of parties which could be identified as Micro, Small and Medium Enterprises on the basis of information available with the Company.

8 Related Party Transactions : A Name of the Related Party and Nature of the Related Party Relationship :

a Holding Company : Cadila Healthcare Limited [ CHL ]

b Partnership Firm : M/s. Zydus Wellness - Sikkim - a Partnership Firm [ ZWS ]

c Fellow Subsidiaries :

Liva Healthcare Limited [ LHL ]

German Remedies Limited

Zydus Technologies Limited

Dialforhealth India Limited [ DHL ]

Dialforhealth Unity Limited

Dialforhealth Greencross Limited

Zydus Pharmaceuticals Limited

Zydus Animal Health Limited [ ZAHL ]

M/s. Zydus Healthcare, Sikkim, a Partnership Firm

Zydus Healthcare Brasil Ltda [ Brazil ]

Zydus Pharmaceuticals (USA) Inc. [ USA ]

Simayla Pharmaceuticals (Pty) Ltd, [ South Africa ]

Zydus Pharmaceuticals Mexico S.A. de C.V. [ Mexico ]

Zydus Healthcare S. A. [Pty] Ltd. [ South Africa ]

Zydus International Private Limited [ Ireland ]

Zydus Pharma Japan Co. Ltd [ Japan ]

Zydus Healthcare (USA) LLC [ USA ]

Zydus France, SAS [ France ]

Zydus Noveltech Inc. [ USA ]

Zydus IntRus Limited [ Russia ]

Quimica E Farmaceutica Nikkho Do, Brasil Ltda. [Brazil]

Zydus Netherlands B.V. [ The Netherlands ]

Laboratorios Combix S.L. [ Spain ]

Etna Biotech S.R.L., [ Italy ]

Script Management Services [ Pty ] Ltd., [ South Africa ]

Zydus Pharmaceuticals Mexico Service Company S.A. de C.V. [ Mexico ]

d Key Management Personnel :

Mr. Anand Deo - Managing Director

9 A Provision for product expiry claims in respect of products sold during the year is made based on the management’s estimates considering the estimated stock lying with retailers. The company does not expect any reimbursement of such claim in future. As the provision made in previous year is considered adequate, no further provision has been made in current year.

10 Deferred Tax :

A The Net Deferred tax Liability of Rs. 113 [ Previous Year : Rs. ( 76 ) ] lacs for the year has been provided in the Profit and Loss Account.

16 Disclosure pursuant to Accounting Standard - 15 [ Revised ] ‘Employee Benefits’ :

A Defined benefit plan and long term employment benefit :

a General description :

Gratuity [ 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 death or resignation or retirement 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.

Privilege Leave [ Long term employment benefit ] :

The Leave encashment scheme is administered through Life Insurance Corporation of India’s “Employees’ Group Leave Encashment-cum-Life Assurance [ Cash Accumulation ] Scheme”. The employees of the Company are entitled to leave as per the leave policy of the Company. The liability on account of the accumulated leave as on last day of the accounting year is recognised [ net of the fair value of plan assets as at the balance sheet date ] at the present value of the defined obligation at the balance sheet date based on the actuarial valuation carried out by an independent actuary using projected unit credit method.


Mar 31, 2010

1 Previous years figures have been regrouped and rearranged wherever necessary.

2 During February, 2010, a fire broke out at one of the warehouse of the company. The company is in the process of lodging a claim with the Insurance company, amounting to Rs. 46.42 lacs as estimated by the company. Pending the final settlement, this has been shown as an "Insurance Claim Receivable" under "Loans & Advances. The difference, if any, on settlement of claim will be effected in Profit and Loss account.

3 Contingent Liabilities not provided for:

INR- Lacs Year ended March 31, 2010 2009 A Claim against the Company not acknowledged as debts 28 0

B The company has imported certain capital equipments at concessional rate of custom duty under "Export Promotion Capital Goods scheme" of the Central Government. The Company has undertaken an incremental export obligation to the extent of US$24.33 Lacs { equivalent to Rs. 992.64 Lacs approx.} [Previous Year US $ 24.33 Lacs { Equivalent to Rs.992.64 Lacs ] to be fulfilled during a specified period as applicable from the date of imports. The liability towards custom duty payable thereon in respect of unfulfilled export obligation as on 31st March,2010 of Rs.124.08 Lacs [as at 31-03-09-Rs.124.08 Lacs] is not provided for as the time has yet to expire for fulfilling such export obligation. 124 124

152 124

4 Segment Information :

The company operates in one segment only, namely "Consumer Products." The Company has only one plant located in Gujarat and the company sells its products in India. Hence, there is no geographical segment also. Therefore, the segment reporting is not applicable.

5 Related Party Transactions :

A Name of the Related Party and Nature of the Related Party Relationship : a Holding Company : Cadila Healthcare Limited b Fellow Subsidiaries:

Liva Healthcare Limited Zydus Healthcare S. A. [Pty] Limited. [South Africa]

German Remedies Limited Zydus International Pvt. Limited. [Ireland]

Zydus Technologies Limited Nippon Universal Pharmaceutical Company Limited [Japan]

Dialforhealth India Limited Zydus Healthcare (USA) LLC [USA]

Dialforhealth Unity Limited Zydus France SAS [France]

Dialforhealth Greencross Limited Zydus Noveltech Inc. [USA]

Zydus Pharmaceuticals Limited Zydus IntRus Limited, [ Russia ]

Zydus Animal Health Limited Quimica E Pharmaceutica Nikkho Do, Brasil Ltda.

[Brazil]

M/s Zydus Healthcare, Sikkim Zydus Netherlands B. V. [The Netherlands]

- a Partnership Firm

Zydus Healthcare Brasil Ltda [Brazil] Laboratories Combix S.L. [Spain]

Zydus Pharmaceuticals USA Inc. [USA] Etna Biotech S.R.L., [Italy]

Simayla Pharmaceuticals (Pty.) Limited, ZC Pharma Services Pty. Ltd. South Africa [South Africa ]

6 A Provision for product warranty claims in respect, of products sold during the year is made on the basis of managements estimations of probable claims of customers in respect thereof considering the estimated stock lying with retailers. The company does not expect any reimbursement of such claim in future.

7 Deferred Tax:

A The Net Deferred tax Assets of Rs. 76 [ Previous Year - Liabilities of Rs. 79 ] Lacs for the year has been reversed in the Profit and Loss Account.

8 Disclosure pursuant to Accounting Standard -15 [ Revised ] Employee Benefits:

A Defined benefit plan and long term employment benefit

a General description :

Gratuity [ Defined benefit plan j ;

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on death or resignation or retirement 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

Privilege Leave [ Long term employment benefit ]

The Leave encashment scheme is administered through Life Insurance Corporation of Indias "Employees Group Leave Encashment-cum-Life Assurance (Cash Accumulation) Scheme". The employees of the Company are entitled to leave as per the leave policy of the Company. The liability on account of the accumulated leave as on last day of the accounting year is recognised (net of the fair value of planned assets as at the balance sheet date) at the present value of the defined obligation at the balance sheet date based on the actuarial valuation carried out by an independent actuary using projected unit credit method.

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