Notes to Accounts of Fredun Pharmaceuticals Ltd.

Mar 31, 2023

(b) Terms / rights attached to equity shares

The company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the company''s residual assets. The equity shares are entitiled to received dividend as declared from time to time. The votings rights of an equity shareholder ona poll (not on show of hands) are in proportion to its share of the paid - up equity capital of the company. Voting rights cannot be excercised in respect of shares on which any call or other sums presently payable have not been paid. Failure to pay any amount called up on shares may lead to forfeiture of the shares. On winding up of the company, the holders of equity shares will be entitled to received the residual assets of the company, remaning after distribution of all preferential amounts in proportion to the number of equity shares held

Nature and purpose of reserves Securities Premium

Securities Premium reserve is used to record the premium on issue of shares which is utilised in accordance with the provisions of The Companies Act, 2013.

The above statement of changes in equity should be read in conjuction with the accompanying notes.

Financial instruments - Risk management

The Company''s activities expose it to a variety of financial risk, including market risk, credit risk and liquidity risk. The company''s primary risk management focus is to minimize potential adverse effect of market risk on its financial performance. The Comapany''s risk management assessment, policies and process are established to identify and analyze the risk faced by the comapny, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and process are reviewed regularly to reflect changes in market conditions and the comapany''s activities. The Board of Directors and the Audit Committee is responsible for overseeing the company''s risk assessment and management policies and processes

Financial risk management

The company has exposure to the following risks arising from financial instruments

1 Credit risk

2 Liquidity risk and

3 Market risk

i Credit risk

Credit risk is the risk of financial loss to the company if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises pricipally from the company''s receivables from customers. Credit risk is managed through credit approvals, establishing credit limits and continously monitoring the creditworthiness of customers to which the company grants credit terms in normal course of business. The company establishes an allowance for doubtful debts and impairment thats represents its estimate of incurred losses in respect of trade and other receivables and investments

Trade and other receivable

The company''s exposure to credit risk is influenced mainly by the individual charracteristic of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the company grants credit terms in the normal course of business.

Expected credit loss assessment

Exposure to customers outstanding at the end of each reporting period are reviewed by the company to determine and expected credit losses. Historical trends of impairment of trade receivables do not reflect any significant credit losses. Given that the macro economic indicators affecting customers of the company have not undergone any substantial change, the company expects the historical trend of minimal credit losses to continue. Further, management believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full, based on historical payment behaviour and extension analysis of customer credit risk. The impairment loss at 31 March, 2023 related to several customers that have defaulted on their payments to the comapny and are not expected to be able to pay their outstanding balances, mainly due to economic circustances.

Cash and cash equivalents

As on 31 March, 2023 the company held cash and cash eqivalents and other bank balances with credit worthy banks and financial institutions of Rs. 294.64/- Lacs (31 March, 2022 Rs.193.77/- Lacs). The credit worthiness of such banks and financial institutions is evaluted by the management on an ongoing basis and is considered to be good.

ii Liquidity risk

Liquidity risk is the risk that the company will not be able to meet its financial obligations as they become due. The company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the company''s reputation

As on 31 March, 2023 the company has working capital of Rs.11004.31/- Lacs (As on 31 March, 2022 Rs.7889.91/- Lacs) including cash and cash equivalents and other bank balances of Rs. 343.51/- Lacs (As on 31 March, 2022 Rs. 207.18/- Lacs ). Working capital is calculated as current assets less current liabilities.

iii Market risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchanges rates) or in the prices of market risk - sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk - sensitive financial instruments, all foreign currency receivables and payables and all short term and long - term debt. The Comapny is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of its investments. Thus, the Comapny''s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.

A Currency risk

The fluctuations in foreign currency exchanges rates may have potential impact on the profit and loss account, where any transaction references more than one currency or where assets/laibilities are denominated in a currency other than the functional currency of the entity

Considering the countries and economic environment in which the company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in USD against the respective functional currency of the company.

As of March 31,2023, the Company''s exposure to foreign currency risk, expressed in INR, is given in the table below. The amounts represent only the financial assets and liabilities that are denominated in currencies other than the functional currency of the Company.

B Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Note - 39

Related party relationships, transaction and balances

The table provides the information about the Group''s structure including Key Management Personnel and Business Organisation controlled by Key Management Personnel or their relatives. The following table provides the total amount of transaction that have been entered into with related parties for the relevant financial year

A. Related parties and nature of relationship where control exist (upto 31 March, 2023)

Key Management Personnel :

i) Mr. Nariman B.Medhora

ii) Mrs. Dr. Daulat N.Medhora

iii) Mr. Fredun N. Medhora

B. Business Organisation controlled by Key Management Personnel or their relatives:

i) Fredna Enterprise

ii) Fredun Healthcare Private Limited

iii) Fredna Enterprise Pvt Ltd

* Revenue information above is based on the locations of the customers Note - 41

Events after the Reporting Period:

1. There are no significant subsequent events that would require adjustments or disclosures in the financial statements as on the balance sheet date except Point No 2 below.

2. The proposed dividend of Rs. 0.70 per Share is recommended by the Board which is subject to the approval of shareholders in the ensuing Annual General Meeting.

Note - 42

Figures For the previous year have been re-grouped/re-arranged wherever necessary to conform current year''s dassiftcation.

Note - 43

Dues to micro and small enterprise

The disclosure pursuant to the Micro, Small and Medium Enterprises Development Act, 2006, (MSMED Act) for dues to micro enterprises and small enterprises as at March 31,2023 and March 31,2022 is as under:

48. Capital Management

The company''s objective while managing capital are:

1. Safeguard its ability to continue as a going concern

2. Maintain an optimal mix of debt and capital to reduce overall cost of capital

3. Provide adequate returns to shareholders

Management assesses the Company''s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. 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

(i) Leave Obligations

The leave obligations cover the Company''s liability for sick and earned leave. The amount of the provision of Rs.96.69/-Lacs (March 31, 2022 Rs. 74.71/- Lacs) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months.

ii) Post-Employment Obligations

Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately multiplied for the number of years of service as per the Scheme.

(iii) Defined Contributions Plans

The Company also has certain defined contribution plans . Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. Amount recognized as an expense during the period towards defined contribution plan is Rs.47.39/- Lacs (March 31,2022 Rs.45.68/- Lacs ).

Additional Details

Methodology Adopted for Assured Life Mortality (ALM) Projected Unit Credit Method Details of Funding Unfunded

Risk exposure and Asset Liability Matching

Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as companies take on uncertain long term obligations to make future benefit payments.

1. Liability Risks

a. Asset-liability Mismatch Risk-

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralize valuation swings caused by interest rate movements. Hence companies are encouraged to adopt asset-liability management.

b. Discount Rate Risk -

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.

c. Future Salary Escalation and Inflation Risk-

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management''s discretion may lead to uncertainties in estimating this increasing risk.

2. Unfunded Plan Risk

This represents unmanaged risk and a growing liability. There is an inherent risk here that the Company may default on paying the benefits in adverse circumstances, Funding the plan removes volatility in company''s financials and also benefit risk through return on the funds made available for the plan.

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Mar 31, 2018

1. The Company’s Board of Directors are responsible for the preparation of the these financial statements in terms of the requirements of the Companies Act, 2013 that give a true and far view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generality accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

2. In the opinion of Board of Directors the provision for depreciation and all known liabilities are adequate and are not in excess of the amounts considered reasonably necessary.

3. Balance of some of the trade receivables, trade paybles, loans and advances are subject to confirmation.

4. The liability of VAT and set off have been accounted for on the basis of working prepared by the Company

5. In accordance with the requirement for disclosure of amounts due to SSI units, as per ‘Micro. Small and Medium Enterprises Development Act,2006’ the Company has not complied the list of its sundry creditors who satisfy this criterion.

6. Information given in accordance with Accounting Standard-18 on Related Party Disclosures issued by ICAI:

Names of the Related Parties:

Key Mandgement Personnel:

I) Mr.N.8.Medhora

ii) Mrs. Dr. Daulat N.Medhora

iii) Mr. Fredun N. Medhora

Business Organisation controlled by Key Management Personnel or their relatives:

i) Fredna Enterprises

ii) Fredun Healthcare Pvt. Ltd.

Following are the transactions entered into with the related parties:

Director Remuneration to Mr. N.B. Medhora (Managing Director)

Director Remuneration to Dr. D.N. Medhora (Joint Managing Director)

Director Remuneration to Mr. Freaun N. Medhora (Director)

Rent paid to Mr. Nariman Medhora for utilising a godown of his proprietary firm Rs. 1.15,20,000/-

Purchases made from Fredna Enterpnses Rs. 1.27,500/-

Purchases made from Fredun Healthcare Pvt. Ltd. Rs. 11,40,25,205 /-Sales made to Fredun Healthcare Pvt. Ltd. Rs. 2,53.41,455/-

7. The payment made towars Credit Cards expenses are in the name of Directors.

8. The trade receivables of Rs -1,98,53,648.26/- of Moonlink Pharmaceuticals Ltd is termed as doubtful fof the recovery during year and claim has been lodged to ECGC and provision fof doubtful debt has not been provided during year. The management representation for the same has been taken and same debt has been provided as bad in the month of May. 2018.

9. Information given in accordance with the requirements of Accounting Standard 17 on Segment Reporting:

The Company is operating in only one segment i.e. Pharmaceutical Formulations

The Geographical segment is considered as secondary segment.

Geographical Segments:

The Company primarily operates in India & therefore the geographical segment is dividend into Indian and Overseas markets:

Sales in India : Rs.34.95,50,246.68/*

Overseas Sales: Rs.23.11,22,397.07/-

10. With regards to the Term Loans taken from Shamrao Vithai Co-op 8ank Ltd., the bank itself debits the installment amounts periodically And thus delay in Payment of installment is only due to the bank debiting the installments amount late and not due to company’s log.

11. Previous year’s figures are regrouped & rearranged wherever necessary.

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Mar 31, 2015

1. 8% Cumulative Redeemable Preference Shares Dividend - 8% of Face Value Redeemable in Financial year 2014-2015

2. OTHER NOTES

1. Additional information pursuant to schedule VI to the Companies Act/1956 is given to the extent applicable to the company,

2. In the opinion of Board of Directors the provision for depreciation and ail known liabilities are adequate and are not in excess of the amounts considered reasonably necessary."

3. Balance of some of the trade receivables, trade payables, loans and advances are subject to confirmation.

4. The liability of VAT and set off have been accounted for on the basis of working prepared by the company.

5. In accordance with the requirement for disclosure of amounts due to SSI units, as per "Micro, Small and Medium Enterprises Development Act,2006" the company has not complied the list of its sundry creditors who satisfy this criterion.

6. Information given in accordance with Accounting Standard-18 on Related Party Disclosures issued by ICAI :

Names of the Related Parties: Key Management Personnel:

i) Mr. N. B.Medhora

ii) Mrs. Dr. D.N.Medhora

iii) Mr. Fredun N. Medhora

Business Organisation controlled by Key Management Personnel or their relatives:

i) Fredna Enterprises

ii) Fredun Healthcare Pvt. Ltd.

Following are the transactions entered into with the related parties:

Director Remuneration to Mr. N.B. Medhora (Managing Director) Rs. 8,00,000/

Director Remuneration to Dr. D.N. Medhora (Joint Managing Director) Rs. 5,70,000/-

Director Remuneration to Mr. Fredun N. Medhora (Director) Rs. 12,00,000/-

Rent paid to Mr. Nariman Medhora for utilising a godown of his proprietory firm Rs. 15,00,000/-

Purchases made from Fredna Enterprises Rs. 2,44,687/-

Purchases made from Fredun Healthcare Pvt. Ltd. Rs. 7,96,320/-

Sales made from Fredun Healthcare Pvt. Ltd. Rs. 50,440/-

7. Information given in accordance with the requirements of Accounting Standard 17 on Segment Reporting :

The Company is operating in only one segment i.e. Pharmaceutical Formulations

The Geographical segment is considered as secondary segment.

Geographical Segments:

The Company primarily operates in India & therefore the geographic is segment is dividend into Indian and Overseas markets:

Sales in India : 66,531,354/-

Overseas Sales: 161,801,256.67

8. With regards to the Term Loans taken from Shamrao Vithal Co-op Bank Ltd., the bank itself debits the installment amounts periodically. And thus delay in Payment of installment is only due to the bank debiting the installments amount late and not due to company''s lag.

9. Previous year''s figures are regrouped & rearranged wherever necessary.