Notes to Accounts of Gujarat Terce Laboratories Ltd.

Mar 31, 2015

1. Sundry Creditors, Sundry Debtors, Deposits, Loans & Advances recoverable in Cash or kind are subject to confirmation.

2. Balances in Share Allotment money, EEFC account and current account with Bank of Baroda is subject to reconciliation. It is taken on the basis of balances as per the books of the Company, as the Statement and certificates are not provided by the Bank.

3. None of the employees of the Company was in receipt of or entitled to receive emoluments in aggregate at a rate of Rs. 200000/- p.m. or more (P.Y. – Rs. 200000/- p.m.) (If employed for part of the year) or Rs. 2400000/- or more p.a. (P.Y. – Rs. 2400000/- or more p.a.) (If employed for full year) (Previous Year - Nil).

* Claims against the Company not Acknowledged as Debt does not include Demand from Indian Income Tax Authorities for payment of Tax Rs. 24031782 for financial year 2004-05, 2010-11 & 2011-12 on completion of assessment proceedings of respective years. The company has filed an appeal before Commissioner of Income Tax (Appeals). It also does not include Demand from Gujarat Sales Tax Authorities for payment of tax Rs.1535493 for financial years 2003-04 & 2004-05 on completion of assessment proceedings of respective years. The company has filed an appeal before Deputy Commissioner of Sales Tax (Appeals). Company is contesting the demand and the management believes that the demand will not sustain in the Appellate Process. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the company's financial position.

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Mar 31, 2014

1.1 Contingent Liabilities Not Provided For

2013-14 2012-13

a) Unutilized Letter of Credit Nil Nil

b) Counter guarantees furnished by the Company in respect of Bank Guarantee 0 1100000

c) Estimated amount of contracts to be executed 0 0 on capital account and not provided for

1.2 (A) Heather to Company was working in Pharma division and Metal division. During the year under review company has discontinued its manufacturing operations in metal division and intimated to department of Central Excise on 23/08/2013 for surrender of Central Excise registration certificate for metal division. Central Excise authority has conducted the audit of metal division in the month of September 2013 and worked out the duty to be paid as Rs. 734864 at the time of surrender of registration i.e. 31/10/2013 which has been duly paid by the company and accordingly the Central Excise Registration is cancelled.

(B) During the year under review Shri Paresh Patel, Managing director along with Miss Monica Patel, Director, who were in charge of the Metal Division, resigned from directorship by filing there resignation on MCA website on 23/09/2013 without authority of the Board of Directors. Later on these resignations were accepted by way of Doctrine of indoor management in view of Consent Sheet accepted by both the parties filed with Company Law Board.

(C) During the year under review, Land of the Metal division of the company was sold by the erstwhile Managing Director of the company Shri Paresh Patel and erstwhile Director Miss Monica Patel, who were in charge of Metal division, without authority of Board of Directors and Shareholders. The petition was filed by the company against the transfer of land which was reported in the unaudited result for the quarter ended on 30/ 09/2013 and 31/12/2013. Later on the petition was resolved amicably in view of Consent Sheet accepted by both the parties filed with Company Law Board. Accordingly the status quo was established regarding the ownership and possession of the property of the metal division situated at Block/Survey no. 140, Ramnagar, Ta: Kalol, Dist: Gandhinagar in favor of Gujarat Terce Laboratories Limited by cancellation of the sale deed executed on 9th May, 2013.

1.3 Petition under Section 397 & 398 of Companies Act, 1956

1) Shri Paresh Patel, Managing Director, in charge of the management of Metal Recycling Division illegally sold off the 4566 sq. mtr factory land located at Block/Survey no 140, Ramnagar, Ta: Kalol, Dist: Gandhinagar having a book value of Rs 1,59,80,120/- at a price of Rs 14.00 lacs on 9/05/2013 and along with it transferred building standing thereon, Plant and Machineries attached to the factory land having book value of Rs 2,46,05,291/- and inventories lying at factory having a book value of Rs 3,75,69,067/- without any consideration to his Associate company Sayona Industries Limited.

2) A criminal complaint was made at The Taluka Police Station, Kalol for misappropriation of funds against Shri Paresh Patel, Managing Director and as suggested by concerned PI & on the ground of financial fraud, a petition before the Company Law Board, Mumbai was filed on 28/01/2014 against him, Sayona Industries Limited and others for following reliefs:

- to declare the action of alleged sale of the property of Metal Division of the Company as invalid and to restore the property i.e. 4566 sq. mtr factory land located at Block/Survey no 140, Ramnagar, Ta: Kalol, Dist: Gandhinagar along with building standing thereon, Plant and Machineries attached to / on the factory land and inventories lying at factory.

- Relief under the provisions of sections 397 and 398 read with violations of Sections 192A, 209, 293 (1) (a), 297, 299 and 630 of the Companies Act 1956.

3) Company Petition No. 7 of 2014 was disposed off by the Hon''ble Company Law Board, Mumbai on 03/04/ 2014 on ground of consent sheet containing following term was filed before it:

i. The parties entered into amicable settlement and there remain no disputes, differences and hence upon consensus arrived whereby Sayona Industries Limited and others assured and promised to cancel the sale deed of 4566 sq. mtr factory land in respect of the "Metal Division" situated at at Block/Survey no 140, Ramnagar, Ta: Kalol, Dist: Gandhinagar.

4) Thereafter, Sayona Industries Limited cancelled the sale deed dated 9/5/2013 of 4566 sq. mtr factory land located at Block No. 140/P, Village : Ramnagar, Ta: Kalol, Dist: Gandhinagar, Gujarat on 2/4/2014 and restored the possession and ownership of the property to the Company.

5) Since fixed assets and other assets as referred under sub clause no (1) above were restored to the Company, there is no financial loss suffered by the Company.

1.4 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

The Company has identified two reportable segments viz Pharmaceutical and Metal Divisions.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities".

Current year and previous year, Term loan from ICICI Car Finance is secured by way of first charge on Swift Car of the company;

Rate of interest (fIxed) 11.51% p.a.

Current year, Term loan from Kotak Mahindra Prime Ltd. is secured by way of first charge on Toyota Etios Car of the company;

Rate of interest (fIxed) 11.15% p.a.

Current year and previous year, Term loan from Bank of Baroda is secured by way of first charge on Staff Bus of the company;

Rate of interest (floating) 11.75 % p.a.

Current year, Term loan from Bank of Baroda is secured by way of first charge on Godown (122/3, Ravi Estate, Chhatral, Gandhinagar.) of the company; Rate of interest (floating) 13.75 % p.a.

Maturity Profile of Long - Term Borrowings from directors & their relatives and others is as set out below: Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

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Mar 31, 2012

1.1 Sundry Creditors, Sundry Debtors, Deposits, Loans & Advances recoverable in Cash or kind are subject to confirmation.

1.2 Balances in Share Allotment money, EEFC account and current account with Bank of Baroda is subject to reconciliation. It is taken on the basis of balances as per the books of the Company, as the Statement and certificates are not provided by the Bank.

1.3 None of the employees of the Company was in receipt of or entitled to receive emoluments in aggregate at a rate of not less than Rs. 200000/- p.m. (P.Y. - Rs. 200000/- p.m.) (If employed for part of the year) or Rs. 2400000/ - or more p.a. (P.Y. - Rs. 2400000/- or more p.a.) (If employed for full year) (Previous Year - Nil).

1.4 Contingent Liabilities Not Provided For

2011-12 2010-11

a) Unutilized Letter of Credit Nil Nil

b) Counter guarantees furnished by the Company in respect of Bank Guarantee 1100000 1100000

c) Estimated amount of contracts to be executed 0 1500000 on capital account and not provided for

1.5 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

The Company has identified two reportable segments viz Pharmaceutical and Metal Divisions.

The accounting policies adopted for segment reporting are in Line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified^ to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities".

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Mar 31, 2010

1. Contingent Liabilities not provided for:

2009-10 2008-09 Rs. Rs.

a) Unutilised Letter of Credit Nil Nil

b) Counter guarantees furnished by the Company in respect of Bank Guarantee 1100000 Nil

c) fstimated amount of contracts to be executed on capital account and not provided for 1500000 1500000

2. Previous years figures have been regrouped/ rearranged wherever necessary to confirm to the current years classification.

3. None of the employees of the Company was in receipt of or entitled to receive emoluments in aggregate at a rate of not less than Rs. 200000/- p.m. (P.Y. - Rs. 200000/- p.m.) (if employed for part of the year) or Rs. 2400000/- or more p.a. (P.Y. - Rs. 2400000/- or more p.a.) (if employed for full year) (Previous Year - Nil).

4. Details of C.I.F. Value of Imports, Expenditure in Foreign currency and earnings in foreign currency are as under:

5. Sundry Creditors, Sundry Debtors, Deposits, Loans & Advances recoverable in Cash or kind are subject to confirmation.

6. The amount in Balance Sheet and Profit & Loss account are rounded off to the nearest rupee.

7. Managerial Remuneration

a. The Company, has been advised that the computation of net profit (for the purpose of calculation of Directors remuneration u/s 349 of the Companies Act, 1956) need not be enumerated since no commission has been paid to the directors and only remuneration has been paid to the directors.

b. Details of payments and provisions on account of remuneration to Managing Director and Whole time Director are included in Profit & Loss account being in the limit of minimum managerial remuneration prescribed by Central Government

8. Balances in Share Allotment money, foreign currency account and current account with Bank of Baroda is subject to reconciliation. It is taken on the basis of balances as per the books of the Company, as the Statement and certificates are not provided by the Bank.

9. Liability for Excise Duty on Finished Goods is accounted as and when they are cleared from factory premises. No provision for Excise Duty is made in the accounts for goods manufactured and lying in bonded warehouses in Factory premises.

10. Company has adopted method of treatment of Modvat Credit in account as prescribed in guidance note on accounting treatment for MODVAT by ICAI. Excise Duty paid on inputs is debited to modvat credit receivable account, so the Purchase cost of inputs (Raw Material) is net of Excise duty. Therefore the inputs consumed (Raw Material) and the inventory of inputs (Raw Material) is valued on the basis of purchase cost net of Excise duty. The debit balance in modvat credit receivable account is shown on the Assets side under the head "Loans & Advances"

11. Due to unavailability of data, the management has not been able to ascertain as to whether there are any Small and Micro Enterprises to whom, the company owes any sum for more than 30 days.

12. As per AS 22 on Accounting for taxes on income issued by ICAI, the Company has provided deferred tax liabilities as on 31st March, 2010 of Rs. 1225605/- for the year by debiting to Profit & Loss A/c. The components of deferred tax liability for the current financial year are:

13. Segment Reporting

The Company is engaged in manufacturing of Tablets, Capsules, Syrup & Injection pertaining to the product group Pharmaceuticals. The Company is selling its product in Domestic as well as International Market. However, the Company is not managed as Segment organization and the location of operations of the Company and its related assets and liabilities are based at one place. This does not provide a reasonable basis for identification/ allocation of segment results/ segment assets segment liabilities. Hence there is only one reportable Business Segment viz. Pharmaceuticals.

14. Details of Raw Material consumed

15. Consumption of Raw Materials and Packing Materials during the period under review :

16. Details of Capacity, Production, Stock and Sale