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Notes to Accounts of Ipca Laboratories Ltd.

Mar 31, 2017

1. Segment Reporting

Disclosure as required by Ind AS 108 "Operating Segment", of the Companies (Indian Accounting Standards) Rules, 2015.

Based on the "management approach" as defined in Ind AS 108, the Chief Operating Decision Maker (CODM) evaluates the Company''s performance In accordance with Ind AS "Operating Segment", the Company has only one reportable operating segment i.e. Pharmaceuticals. The additional disclosure is being made in the consolidated financial statements.

*Note:- It includes Rs,4.38 crores (Previous year Rs,4.38 crores) towards interest and penalty demanded by excise department, Ankleshwar relating to erstwhile Tonira Pharma Limited since amalgamated with the Company and is not payable in accordance with the order passed by the Hon''ble Central Excise and Service Tax Appellate Tribunal (CESTAT), Ahmadabad. The Department had moved the Hon''ble Gujarat High Court against the said CESTAT order and as per the order of the said Hon''ble High Court, the Company has furnished a Bank Guarantee of Rs,2.00 crores (Previous year Rs,2.00 crores) to the Department.

2. Significant accounting judgments, estimates and assumptions

The financial statements require management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosures of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods .

a. Judgments

In the process of applying the company''s accounting policies, management has made judgments, which have significant effect on the amounts recognized in the separate financial statements.

b. Taxes

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

c. Defined benefit plans (gratuity benefits)

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. For plans operated outside India, the management considers the interest rates of high quality corporate bonds in currencies consistent with the currencies of the post-employment benefit obligation with at least an ''AA'' rating or above, as set by an internationally acknowledged rating agency, and extrapolated as needed along the yield curve to correspond with the expected term of the defined benefit obligation. The underlying bonds are further reviewed for quality. Those having excessive credit spreads are excluded from the analysis of bonds on which the discount rate is based, on the basis that they do not represent high quality corporate bonds.

The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the respective countries.

3. First-time adoption of Ind AS

These financial statements, for the year ended March 31, 2017, are the first financial statements the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2017, together with the comparative period data as at and for the year ended March 31, 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at April 1, 2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its previous GAAP financial statements, including the balance sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31, 2016.

A. Exemptions applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

i. The Company has elected to apply the exemption for deemed cost of property, plant and equipment contained in D7AA of Ind AS 101 by considering the previous GAAP carrying values as deemed costs. Accordingly the Net block as at March 31,2015 as per the previous GAAP have been considered as the deemed cost as at April 1, 2015 and are being depreciated over the residual useful life on a straight line basis.

ii. Ind AS 101 permit cumulative translating gains and losses to be reset to zero at the transition date. This provides relief from determining cumulative currency translation difference in accordance with Ind AS 21.

iii. The Company has designated unquoted equity instruments held at April 01, 2015 as fair value through P&L.

D Notes to effect of first time adoption

i) FVTPL Financial assets

Under Indian GAAP, the Company accounted for long term investments and mutual funds in unquoted and quoted equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Company has designated such investments other than investments in subsidiaries/ joint ventures and associates as FVTPL investments. Ind AS requires FVTPL investments to be measured at fair value. At the date of transition to Ind AS, difference between the instruments fair value and previous GAAP carrying amount has been recognized under retained earnings.

On this account of this adjustment the retained earnings increased by Rs, 0.46 crore as at March 31, 2016 and is decreased by Rs, 0.50 crore as at April 01, 2015.

ii) Trade Receivables

As per Ind AS 109, the Company is required to apply expected credit loss model for recognizing the allowance for doubtful debts. As a result, the allowance for doubtful debts is Rs, (0.18) crore as at March 31, 2016 and Rs, 0.81 crore as at April 01, 2015.

iii) Defined benefit liabilities

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss. Accordingly Rs, (12.09) crores net of tax thereon has been adjusted in other comprehensive income from retained earnings as at April 01, 2015. The adjustment for the year ended March 31, 2016 is Rs, 1.35 crores net of the tax effect thereon. As a result of this change, the retained earnings as at April 01, 2015 and profit for the year ended March 31, 2016 has been adjusted. There is no impact on the total equity as at March 31, 2016.

iv) Foreign currency translation reserve

Under Indian GAAP, the Company recognized translation differences on foreign operations in a separate component of equity. Under Ind AS, the balance appearing in the foreign currency reserve has been reset to zero as at April 1, 2015 by transfering the same to retained earnings. Accordingly, foreign currency translation reserve balance under previous GAAP has been transferred to retained earnings. There is no impact on total equity as a result of this adjustment.

v) Borrowings

Ind AS 109 requires transaction costs incurred towards origination of borrowing to be deducted from carrying amount of borrowings on initial recognition. These cost are recognized in the profit and loss over the tenure of the borrowing as part of the interest expenses by applying the effective interest rate method.

Accordingly, the upfront fees has been amortised over the loan period as against charge to the profit and loss statement in the initial year. On account of this change, retained earnings as at April 01, 2015 has been increased by Rs, 3.22 crores with consequent adjustment of the upfront fees as prepaid expenses to be amortised over the period of the loan.

vi) Provisions for expiry, returns and breakage/ damage

The Company has estimated probable expiry, returns and breakage/ damage based on past trends and has made provision thereon as required by Ind AS 18 "Revenue recognition". On account of this change, the retained earnings as at April 01, 2015 has been decreased by Rs, 45.07 crores with consequent increase in provision. The impact for the year ended March 31, 2016 is Rs, 2.28 crores on the profit for the year with corresponding effect on the balance of provisions.

vii) Deferred tax

Consequent impact on deferred tax arising out of various adjustments under Ind AS has been given in accordance with Ind AS 12 "Income Taxes". On the date of transition the net impact of deferred tax is Rs, 15.88 crores which is adjusted against retained earnings. For the year ended March 31, 2016 the impact on profit arising out of deferred tax changes is Rs, 2.22 crores.

viii) Excise duty

Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is accounted as a cost under other expenses. Thus sale of goods under Ind AS has increased by Rs, 31.74 crores in March 2016 with a corresponding increase in other expense. There is no impact on total equity.

ix) Statement of cash flows

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

x) Proposed Dividend

Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability as at March 31, 2015. Under Ind AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of Rs, 12.62 crores and Rs, 2.57 crores tax liability as at March 31, 2015 has been reversed back to retained earnings. The same is charged to retained earnings during the year ended March 31, 2016 on approval by the shareholders. There is no impact on equity as at March 31, 2016.

xi) Goodwill

Under Ind AS goodwill on business acquisition is not required to be amortized but is to be tested for impairment. Accordingly, amortization of goodwill during March 31, 2016 has been reversed and the goodwill is carried at April 01, 2015 values. On account of this profit for the year March 31, 2016 is higher by Rs, 8.49 crores.

xii) Security deposits

Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value. Accordingly, the group has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognized as prepaid rent. Consequent to this change, the amount of security deposits increased by Rs, 0.80 crores as at March 31, 2016 and decreased by Rs,18.45 crores as at April 01, 2015. The prepaid rent decreased by Rs, 1.76 crores as at March 31, 2016 and increased by Rs, 18.17 crores as at April 01, 2015. The net impact on retained earnings as at April 01, 2015 is decrease of Rs, 0.27 crores and the impact on profit for the year ended March 31, 2016 is decrease of Rs, 0.96 crores.

xiii) Retained earning

Retained earnings as at April 1, 2015 has been adjusted consequent to the above Ind AS transition adjustments.

4. Standards issued but not yet effective

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, ''Statement of cash flows'' and Ind AS 102, ''Share-based payment.'' These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ''Statement of cash flows'' and IFRS 2, ''Share-based payment'', respectively. The amendments are applicable to the Company from April 1, 2017.

Amendment to Ind AS 7:

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.

The Company is currently evaluating the requirements of the amendment and has not yet determined the impact on the financial statements.

Amendment to Ind AS 102:

The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.

It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting conditions are reflected in the ''fair values'', but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement. The Company is currently evaluating the requirements of the amendment and has not yet determined the impact on the financial statements.

The management assessed that fair value of cash and short-term deposits, trade receivables, trade payables, book overdrafts and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

5. Fair Value Hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are (a) recognized and measured at fair value and (b) measured at amortized cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the group has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

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

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

6. Financial Risk Factors

The Company''s business activities are exposed to a variety of financial risks: Market/ Business risk, credit risk, Exchange risk, etc. The Company''s focus is to foresee the unpredictability of financial and business risks and seek to minimize potential adverse effects of these risks on its business and financial performance.

i. Business/ Market Risk

The primary business/ market risk to the Company is the price risk and its ability to pass on the same to its customers. The Company''s operations extend to a number of countries across the globe and its products pricing competitiveness is a primary factor for the acceptability of Company''s products in those markets. The Company has a robust procurement process, which ensures that its pricing power is not adversely affected by price changes in the market place for its raw -materials. The backward integration into manufacturing of several API''s for its own use in the formulations manufacturing also works as a mitigating strategy for price risk faced by the Company.

The other business risk is regulatory risk and regulatory audits of its manufacturing facilities by the regulators to ensure that the manufacturing facilities meet the current Good Manufacturing Practices (cGMP) requirements. The Company is already exposed to certain audit observations from the US FDA for 3 of its manufacturing plants and has taken the necessary corrective measures to redress those US FDA audit observations so as to be able to market all its products once again in the US market. While the stringent regulatory requirements and audits works as a business risk, the successful audit of its facilities by regulators coupled with price competitiveness results in higher business and margins for the Company.

The Company''s products are also subjected to product liability claims/ litigations. To mitigate these risks, the Company has obtained adequate Product Liability Insurance.

The Company, however, has a reduced risk from dependence on any single customer as no single customer or customer group accounts for more than 10% of Company''s annual revenue. The Company also continuously forays into different markets/ countries to reduce its dependence on any particular country or customer group. The Company also has a diversified therapeutic product portfolio and therefore no single product account for more than 10% of Company''s annual revenue.

ii. Credit Risk

The Company has exposure to credit risks associated with sales to various developing markets/ countries. To mitigate these credit risks arising out of this, the Company obtains credit insurance on a regular basis after evaluating the credit risk associated with a country/ customer. Country/ customer where no credit insurance is available, the Company monitors such risk by continuously monitoring its exposure to such country/ customer. There was no historically significant credit risk in the domestic market for the Company. Based on the historical data, the Company has made adequate provisions for expected loss because of credit risk, which is neither significant nor material.

iii. Interest Risk

The Company has borrowings mainly in foreign currencies which is linked to Libor. The Company mitigates these risks associated with floating Libor rates by entering into interest rate swaps to move them to fixed Libor rates. The domestic interest risk is exposed to the changes in the RBI bank rate. The Company manages this risk by managing its working capital effectively.

iv. Foreign Currency Risk

The company continuously manages its risks associated with foreign currency by adopting various hedging strategies in consultation with internal and external experts. The Company has a system of regularly monitoring its currency wise exposures. The significant part of Company''s receivables and borrowings are in US Dollars which operates as a natural hedge against each other. The Company has a policy not to borrow in a currency where it has no business exposure.

7. Capital Management

For the purpose of the Company''s capital management, capital includes paid-up equity share capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximize the shareholders'' value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust its dividend payment ratio to shareholders, return capital to shareholders or issue fresh shares. The Company monitors capital using a gearing ratio, which is net debt divided by its total capital. The Company includes within its net debt the interest bearing loans and borrowings, trade and other payables less cash and cash equivalents.

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets the financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the lending institutions to immediately call back the loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing the capital during the years ended March 31, 2017 and March 31, 2016.

8. The Balance Sheet, Statement of Profit and Loss, Cash Flow Statement, Statement of changes in equity, Statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended March 31, 2017.


Mar 31, 2016

I) Rights and obligations of shareholders

The Company has only one class of share referred as Equity shares having a par value of Rs, 21- per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after payment of external liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders.

* Debenture redemption reserve is maintained in accordance with the Companies (Share capital & Debenture) Rules, 2014.

** General Reserve represents the reserve created in accordance with Companies (Transfer of Profits to Reserves) Rules, 1975.

*** Hedging Reserve represents the fair value changes of hedging instruments that are designated and effective as hedges of future cash flows. **** Exchange difference arising on a monetary item that, in substance, forms part of an enterprise''s net investments in a non-integral foreign operation are accumulated in foreign currency translation reserve.

* During the previous year, part amount of the loan to I pea Laboratories (U.K.) Limited has been converted to preference capital.

a) Share application money pending allotment of the previous year represents amount invested in Krebs Biochemical''s & Industries Limited, an associate, for allotment of 23,00,000 fully paid equity shares of Rs, 10/-each, which are alloted on 9th May, 2015.

b) Deposit includes Rs, 45.00 crores (previous year Rs, 39.44 crores) given as lease deposit for two manufacturing facilities of Krebs Biochemicals & Industries Limited taken on lease by the Company.

Valuation methodology

Raw materials and packing materials Lower of cost and Net realisable value. However materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on First-in-First-out basis.

Work-in-process and finished goods At lower of cost including material cost net of CENVAT, labour cost and all overheads other than selling and distribution overheads and net realisable value. Excise duty is considered as cost for finished goods wherever applicable.

Stores and spares Stores and spare parts are valued at lower of purchase cost computed on First-in-First-out method and net realisable value.

Traded Goods Traded Goods are valued at lower of purchase cost and net realisable value.

Pursuant to the retrospective amendment to the Payment of Bonus Act, the Company was required to make provision for differential bonus for the year 2014-15 as per the amendment. However, various High Courts have granted interim stay to the applicability of the amendment for the year 2014-15. The Company has therefore not made provision for differential bonus for the year 2014-15. Provision for Bonus for the current year is made as per the amendment.

Note: a) In accordance with the provisions of Schedule II to the Companies Act 2013, effective from 1st April, 2014, the Company had revised the useful lives of its fixed assets. Asa consequence of such revision, the charge for depreciation is higher than the previously applied rates by Rs, 37.68 crores for the previous year. For assets that had completed the useful lives as a consequence of the aforesaid revision, the carrying value as on 1st April, 2014 of Rs, 13.26 crores had also been charged to the statement of profit and loss. The depreciation charged for the previous year is accordingly higher by Rs, 50.94 crores. b) The Company has revised the useful life of plant and machinery installed at its formulation plants based on certificate from technical expert from 15 years as per Schedule II to 20 years. Based on this revision depreciation for the year is computed on such assets. On account of this revision, depreciation for the year is lower by Rs, 14.53 crore and profit before tax is higher by similar amount.

1. Disclosure as required by Accounting Standard - AS 19 "Leases" of the Companies (Accounting Standards) Rules 2006.

The Company has taken various residential / god owns / offices premises (including Furniture and Fittings if any) under leave and license agreements. These generally range between 11 months to 3 years under leave and license basis. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in the Statement of Profit and Loss under Rent.

During the previous year the Company has taken on operating lease two manufacturing facilities of M/s. Krebs Biochemicals & Industries Limited for manufacturing of products at the said facilities. An amount of Rs, 45.00 crores (previous year Rs, 39.44 crores) has been paid as lease deposit. Since the lease is cancellable at the option of the Company, the further disclosure of committed lease payments are not made.

*Note: It includes Rs, 4.38 crores (Previous year Rs, 4.38 crores) towards interest and penalty demanded by excise department, Ankleshwar relating to erstwhile Tonira Pharma Limited since amalgamated with the Company and is not payable in accordance with the order passed by the Hon''ble Central Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad. The Department had moved the Hon''ble Gujarat High Court against the said CESTAT order and as per the order of the said Hon''ble High Court, the Company has furnished a Bank Guarantee of Rs, 2.00 crores(Previous year Rs, 2.00 crores) to the Department.

2. a) The Company has entered into various derivatives transactions, which are not intended for trading or speculative purpose but to hedge the export receivables including future receivables and foreign currency loan interest rate risks.

3. In the opinion of the Board of Directors, all the assets other than fixed assets and noncurrent investments have value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

4. The balance sheet, statement of profit and loss, cash flow statement, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended 31st March, 2016.

5. Previous year''s figures have been regrouped and rearranged wherever necessary to make them comparable.


Mar 31, 2015

I) Rights and obligations of shareholders

The Company has only one class of share referred as equity shares having a par value of Rs. 2/- per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after payment of external liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders.

* Debenture redemption reserve is maintained in accordance with the Companies (Share capital & Debenture) Rules, 2014.

** General Reserve represents the reserve created in accordance with Companies (Transfer of Profits to Reserves) Rules, 1975.

*** Hedging Reserve represents the fair value changes of hedging instruments that are designated and effective as hedges of future cash flows.

**** Exchange difference arising on a monetary item that, in substance, forms part of an enterprise''s net investments in a non-integral foreign operation are accumulated in foreign currency translation reserve.

ii) Disclosure u/s 186(4):

During the year the Company has invested in 18,00,000 equity shares of Krebs Biochemicals & Industries Limited(Krebs) which aggregate to 18.92% of total equity of Krebs.

The Company had already taken two of the plants of Krebs on lease basis before the acquisition of the stake and this acquisition will fortify the business interest of the Company.

Considering the business connection with Krebs and also the equity stake of 18.92%, the same is considered as an associate as per AS-23, Accounting for Investments in Associates in Consolidated Financials Statements.

The Company has also made an announcement for open offer as per the extant SEBI regulations.

The Company has paid share application money of Rs. 12.42 crores for 23,00,000 additional shares, which is since allotted on 9th May 2015. The share application money is disclosed under loans and advances.

a) Share application money pending allotment represents amount invested in Krebs Biochemicals & Industries Limited, an associate, for allotment of 23,00,000 fully paid equity shares of Rs. 10/- each, since alloted on 9th May, 2015.

b) Deposit includes Rs. 39.44 crores given as lease deposit for two manufacturing facilities of Krebs Biochemicals & Industries Limited taken on lease by the Company.

Note : In accordance with the provisions of Schedule II to the Companies Act 2013,effective from 1st April,2014, the Company has revised the useful lives of its fixed assets. As a consequence of such revision, the charge for depreciation is higher than the previously applied rates by Rs. 50.94 crores for the year. For assets that have completed the useful lives as a consequence of the aforesaid revision, the carrying value as on 1st April, 2014 of Rs. 13.26 crores had been charged to the opening balance of the surplus in statement of profit and loss in the first quarter alongwith the deferred tax effect thereon of Rs. 4.51 crores. The Management following the MCA circular no. GSR 627(E) dated 29th August, 2014 has decided to charge the amount of Rs. 13.26 crores as aforesaid to the Statement of profit & loss instead of charging the surplus in statement of profit & loss. The depreciation charged for the year is accordingly higher by Rs. 13.26 crores as compared to the disclosure in quarterly results.

2. Disclosure as required by Accounting Standard - AS 17 "Segment Reporting" of the Companies (Accounting Standards) Rules 2006.

In accordance with AS-17 "Segment Reporting", The Company has only one reportable primary business segment i.e. Pharmaceuticals. However, the Company has secondary geographical segment which is disclosed in Consolidated Financial Statements as per AS-17.

3. Disclosure as required by Accounting Standard - AS 19 "Leases" of the Companies (Accounting Standards) Rules 2006.

The Company has taken various residential / godowns / offices premises (including Furniture and Fittings if any) under leave and license agreements. These generally range between 11 months to 3 years under leave and license basis. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in the Statement of Profit and Loss under Rent.

During the year the Company has taken on operating lease two manufacturing facilities of M/s. Krebs Biochemicals & Industries Limited for manufacturing of products at the said facilities. An amount of Rs. 39.44 crores has been paid as lease deposit. Since the lease is cancellable at the option of the Company, the further disclosure of committed lease payment are not made.

*Note: It includes Rs. 4.38 crores (Previous year Rs. 4.38 crores) towards interest and penalty demanded by excise department, Ankleshwar relating to erstwhile Tonira Pharma Limited since amalgamated with the Company and is not payable in accordance with the order passed by the Hon''ble Central Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad. The Department had moved the Hon''ble Gujarat High Court against the said CESTAT order and as per the order of the said Hon''ble High Court, the Company has furnished a Bank Guarantee of Rs. 2.00 crores(Previous year Rs. 2.00 crores) to the Department.

4. In the opinion of the Board of Directors, all the assets other than fixed assets and non current investments have value on realisation in the ordinary course of business atleast equal to the amount at which they are stated in the Balance Sheet.

5. The balance sheet, Statement of profit and loss, cash flow statement, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended 31st March''2015.

6. Previous year''s figures have been regrouped and rearranged wherever necessary to make them comparable.

Note : In accordance with the provisions of Schedule II to the Companies Act 2013, effective from 1st April, 2014, the Company has revised the useful lives of its fixed assets. As a consequence of such revision, the charge for depreciation is higher than the previously applied rates by Rs. 50.94 crores for the year. For assets that have completed the useful lives as a consequence of the aforesaid revision, the carrying value as on 1st April, 2014 of Rs. 13.26 crores had been charged to the opening balance of the surplus in statement of profit and loss in the first quarter alongwith the deferred tax effect thereon of Rs. 4.51 crores. The Management following the MCA circular no. GSR 627(E) dated 29th August, 2014 has decided to charge the amount of Rs. 13.26 crores as aforesaid to the Statement of profit & loss instead of charging the surplus in statement of profit & loss. The depreciation charged for the year is accordingly higher by Rs. 13.26 crores as compared to the disclosure in quarterly results.

Notes:

a. The Segment Revenue in the geographical segments considered for disclosure are on the basis of customer location.

b. In the case of Segment asset and segment capital expenditure the amount attributable to geographical segment "Outside India" is less than 10% of the respective Total assets and Total capital expenditure of the reporting enterprise and hence not disclosed separately.

7. Disclosure as required by Accounting Standard - AS 19 "Leases" of the Companies (Accounting Standards) Rules 2006.

a) The Company has taken various residential / godowns / offices premises (including Furniture and Fittings if any) under leave and licence agreements. These generally range between 11 months to 3 years under leave and licence basis. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in the Statement of Profit and Loss under Rent.

b) During the year the Company has taken on operating lease two manufacturing facilities of M/s. Krebs Biochemicals & Industries Limited for manufacturing of products at the said facilities. An amount of Rs. 39.44 crores has been paid as lease deposit. Since the lease is cancellable at the option of the Company, the further disclosure of committed lease payment are not made.

8. Disclosure as required by Accounting Standard - AS 27 "Financial Reporting of Interest in Joint Ventures" of the Companies (Accounting Standards) Rules 2006.

The Company is holding 49.02% of Shares in Avik Pharmaceutical Ltd. It is a Jointly Controlled entity in which the Company has a control of 49.02%. In the standalone Balance Sheet of the Company, Joint Venture interest is reported under Long term Investment at Cost. Proportionate share of the Company as on 31st March, 2015 in the assets, liabilities, income, expenditure, contingent liabilities and capital commitments of the Joint Venture company is as follows:

9. The company''s provision for diminution in value of investments in shares of National Druggist (Proprietary) Ltd. and Ipca Pharmaceuticals (Shanghai) Ltd. for Rs. NIL (Previous year Rs. 0.39 crore) and Rs. 0.05 crore (Previous year Rs. 1.00 crore) respectively is reversed in these consolidated accounts since the full loss of the said subsidiaries is accounted in this accounts.

10. In the opinion of the Board of Directors, all the assets other than fixed assets and non current investments have value on realisation in the ordinary course of business atleast equal to the amount at which they are stated in the Balance Sheet.

11. The balance sheet, Statement of profit and loss, cash flow statement, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended 31st March''2015.

12. Previous year''s figures have been regrouped and rearranged wherever necessary to make them comparable.


Mar 31, 2014

1. Disclosure as required by Accounting Standard - AS 17 "Segment Reporting" of the Companies (Accounting Standards) Rules 2006.

In accordance with AS-17 "Segment Reporting" The Company has only one reportable primary business segment i.e. Pharmaceuticals. However, the Company has secondary geographical segment which is disclosed in Consolidated Financial Statements as per AS-17.

2. Disclosure as required by Accounting Standard - AS 19 "Leases" of the Companies (Accounting Standards) Rules 2006.

The Company has taken various residential/go downs/offices premises (including Furniture and Fittings if any) under leave and license agreements. These generally range between 11 months to 3 years under leave and license basis. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in the Statement of Profit and Loss under Rent.

3. Contingent liabilities and commitments not provided for in respect of:

As at As at Particulars 31/03/2014 31/03/2013 (Rs. Crores) (Rs. Crores)

A. Contingent Liabilities

a) Bills discounted with banks 256.40 237.09 Since Realised (103.77) (150.79)

b) Other moneys for which the Company is contingently liable for tax, excise, customs 16.44* 11.82* and other matters not accepted by the Company Amount deposited under protest (4.08) (0.05)

c) Claims against the Company not acknowledged as debts 2.95 2.98

d) Corporate Guarantee given to others 8.28 2.28

e) Guarantees given by banks in favour of Govt.& others/ Letter of Credit opened against 82.71 62.44 which goods are not received * 258.93 165.77

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

- Tangible Assets 155.45 45.39

- Intangible Assets 28.16 6.29

183.61 51.68

C. Uncalled liability on partly paid shares 3.40 3.40

D. Other Commitments - -

*Note:- It includes Rs. 4.38 crores (Previous year Rs. 4.38 crores) towards interest and penalty demanded by excise department, Ankleshwar relating to erstwhile Tonira Pharma Limited since amalgamated with the Company and is not payable in accordance with the order passed by the Hon''ble Central Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad. The Department had moved the Hon''ble Gujarat High Court against the said CESTAT order and as per the order of the said Hon''ble High Court, the Company has furnished a Bank Guarantee of Rs. 2.00 crores(Previous year Rs. 2.00 crores) to the Department.

4. In the opinion of the Board of Directors, all the assets other than fixed assets and non current investments have value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

5. The balance sheet, Statement of profit and loss, cash flow statement, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended 31 st March''2014.

6. Previous year''s figures have been regrouped and rearranged wherever necessary to make them comparable.


Mar 31, 2013

1. Disclosure as required by Accounting Standard - AS 17 "Segment Reporting" of the Companies (Accounting Standards) Rules 2006.

The entire operations of the Company relate to only one segment viz. pharmaceuticals. As such, there is no separate reportable segment under Accounting Standard - AS 17 on Segment Reporting.

2. Disclosure as required by Accounting Standard - AS 19 "Leases" of the Companies (Accounting Standards) Rules 2006.

The Company has taken various residential / godowns / office premises (including Furniture and Fittings if any) under leave and license agreements. These generally range between 11 months to 3 years on leave and license basis. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognised in the Statement of Profit and Loss under Rent.

3. Disclosure as required by Accounting Standard - AS 20"Earning Per Share"of the Companies (Accounting Standards) Rules 2006.

The earning per share is calculated by dividing the profit after tax by weighted average no. of shares outstanding for basic & diluted EPS.

4. a) The Company has entered into various derivatives transactions, which are not intended for trading or speculative purpose but to hedge the export receivable including future receivables and foreign currency loan interest rate risks.

b) The Company has continued its decision not to exercise the option available under amendment to AS 11 relating to "The effects of Changes in Foreign Exchange Rates" in respect of its Long Term Foreign Currency Monetary Items in respect of foreign currency loans for the acquisition of fixed assets.

c) The Company has following unhedged foreign exchange risk.

d) The Company has an annual average exports of USD 315 Million (Previous year USD 291 Million) of which the Company has partially hedged its receivables by the aforesaid options disclosed in para (a) above. The unhedged currency risk detailed in para (c) above has a natural hedge against the unhedged export receivables of USD 19.20 Million as at 31st March,2013 (Previous year USD 4.58 Million).

5. In the opinion of the Board of Directors, all the assets other than fixed assets and non current investments have value on realisation in the ordinary course of business atleast equal to the amount at which they are stated in the Balance Sheet.

6. The balance sheet, Statement of profit and loss, cash flow statement, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended 31st March''2013.

7. Previous year''s figures have been regrouped and rearranged wherever necessary to make them comparable.


Mar 31, 2012

A) Aggregate Shares issued under Employees Stock Option Scheme (ESOS) : 21,08,750 Equity Shares of Rs.2/- each (Previous year 19,87,500 Equity Shares)

b) Equity Share of Rs.10 each have been sub-divided into five equity shares of Rs.2/- each pursuant to the resolution passed by the shareholders at the Extra Ordinary General Meeting held on 25th February, 2010.

c) 53,210 Equity Shares of Rs. 10 each in 2009-10 and 2,03,009 Equity Shares of Rs. 10/- each in 2008-09 have been extinguished under Buy back Scheme.

d) The outstanding equity shares to be issued aggregating to Rs.0.06 crore representing 3,22,704 equity shares of Rs. 2/- each of the Company under the scheme of amalgamation of Tonira Pharma Ltd. with the Company is shown as Equity Share Suspense account under Share Capital.

e) As per the Scheme of Amalgamation, the authorised share capital of Tonira Pharma Limited of 1,20,00, 000 equity shares of Rs.10/- each is added to the Authorised Share Capital of the Company as 6,00,00,000 equity shares of Rs 2/- each amounting to Rs. 12.00 Crores.

# Due to corporate action on 23rd March,2010 for sub-division of 1 fully paid up equity share of Rs. 10/- each into 5 fully paid up equity shares of Rs.2/- each,each of the outstanding options now represent a right but not an obligation to the option grantee to apply for 5 fully paid up equity shares of Rs.2/- each of the Company at exercise price duly adjusted for the said corporate action.

I) Merger of Tonira Pharma Limited with the Company

Pursuant to scheme of amalgamation ('the scheme') of Tonira Pharma Limited (TPL) with Ipca Laboratories Limited (ILL) under the provisions of Sections 391 to 394 of the Companies Act, 1956 as sanctioned by the Honorable High Court of Judicature of Bombay vide its order dated 30th March, 2012 and by the Honorable High Court of Judicature of Gujarat vide its order dated 2nd April'2012, which orders have been filed with the Registrar of Companies on 15th and 16th of May, 2012, respectively, to make the scheme effective, all the assets and liabilities of the said TPL were transferred to and vested in the Company as a going concern with effect from the appointed date i.e. 1st April'2011. Accordingly, this scheme of amalgamation has been given effect to in these accounts.

Salient Features of the scheme of Amalgamation

TPL was engaged in the business of manufacturing/marketing of Drug Intermediates and Active Pharmaceutical Ingredients. ILL is engaged in the business of manufacturing/marketing of Drug Intermediates, Active Pharmaceutical Ingredients and Pharmaceutical formulations.

The appointed date for the purpose of this amalgamation is 1st April, 2011

In accordance with the scheme approved, the accounting for this amalgamation has been done in accordance with the "Pooling of Interest Method" referred to in Accounting Standard 14- "Accounting for Amalgamation" of the Companies (Accounting Standards) Rules, 2006.

Accordingly, ILL has accounted for the Scheme in its books of accounts with effect from the Appointed Date i.e. 1st April, 2011 as under :

i) With effect from the Appointed Date, all assets and liabilities appearing in the books of accounts of TPL have been transferred to and vested in ILL and have been recorded by ILL at their respective book values.

ii) In consideration of the transfer of the business as a going concern, the Company shall issue 6 fully paid-up equity shares of Rs. 2/- each of the Company for every 100 equity share of Rs. 10/- each fully paid-up of TPL to the equity shareholders of TPL. Pending allotment, the outstanding equity shares to be issued aggregating to Rs.0.06 crore representing 3,22,704 equity shares of Rs. 2/- each of the company is shown as Equity Share Suspense account under Share Capital.

iii) The equity shares in TPL held by the Company have been cancelled under the scheme.

iv) The difference between the book value of net identifiable assets and liabilities of TPL transferred to ILL pursuant to this scheme and the consideration being the value of New Equity Shares to be issued & allotted by ILL amounting to Rupees 0.55 Crore has been credited to capital reserve account.

v) Accordingly, 3,22,704 equity shares of ILL of Rs. 2/- each fully paid up are to be issued to the shareholders of TPL under this amalgamation. The record date fixed for this purpose is 31st May, 2012.

vi) All inter company transactions have been eliminated on incorporation of the accounts of TPL in the Company.

vii) The Company shall proceed to issue these equity shares to the shareholders of TPL in due course of time.

viii) The transactions of the business of TPL with effect from 1st April, 2011 have been incorporated in the Company's accounts on the basis of the Audited Financial Statements of the business, which is treated as a Company's Branch, as audited by M/s Mitesh P Vora & Co. Chartered Accountants, the statutory auditors of the erstwhile TPL. They were appointed by the Board of Directors of the Company as its Branch Auditors.

In view of the aforesaid amalgamation, the figures for the current year are not strictly comparable to those of the previous year.

A. Share Application Money Pending Allotment

The share application money pending allotment of Rs. 10,500 is received as commitment deposit from employees/directors under Employee Stock Option scheme (ESOS) on grant of stock options pending allotment.

The above ESOS is in accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) guidelines, 1999.

52,500 shares of Rs. 2.00 each are to be issued against the commitment money so received at an exercise price of Rs.63 per share.

The company has sufficient authorised capital to cover the share capital amount on allotment of shares out of share application money.

The above 52, 500 shares are to be issued at a premiun of Rs. 61 per share.

The shares will be allotted in accordance with the scheme before 31st March, 2013.

a) Security and repayment terms

i) Debentures

12.75% Secured Redeemable Non-Convertible Debentures amounting to Rs 33.33 Crores (Previous year Rs. 50.00 Crores) - Redeemble in 3 equal annual instalments of which one instalment is paid. Secured by mortgage over Company's office premises at Ahmedabad, Gujarat, first pari passu charge over movable & immovable properties at Dehradun & pari passu first charge on Company's plant & machinery at Ratlam. The schedule of repayment is : 26th December, 2013 Rs.16.66 Crores ; 26th December, 2012 Rs.16.67 Crores.

9.95% Secured Redeemable Non-Convertible Debentures of Rs.50.00 Crores (Previous year Rs. NIL) - Redeemble at the end of 3rd year by exercising put/call option or, at the end of 5th year, both from the date of issue i.e. 3rd October 2011. Secured by mortgage over Company's office premises at Ahmedabad, Gujarat and first pari-passu charge over movable property of the Company includes plant & machinery situated at Ratlam, Athal (Silvassa), Indore (M.P.), Piparia (Silvassa), Pithampur (Indore) and Dehradun.

ii) Rupee Term Loan

HDFC Bank Ltd.- Rs. NIL (Previous year Rs. 18.67 Crores) Repayble in 15 equal quarterly instalments from 16th May,2009, secured by first pari passu charge by way of hypothecation of movable fixed assets both present and future except on movable fixed assets at Pithampur, Indore. The said loan is prepaid before the Balance sheet date.

Bank of Baroda - Rs. NIL (Previous year Rs.15.00 Crores) Repayble in 3 equal annual installments from 30th March,2012, secured by first charge by way of equitable mortgage of land and building of the Company situated at Indore(except Pithampur), Dehradun, Ratlam, Mumbai, Athal & Piparia. The said loan is prepaid before the Balance sheet date.

iii) Foreign Currency Term Loan

ICICI Bank Offshore Banking Unit - Rs. 7.64 Crores(Previous year Rs. 20.07 Crores) Repayable in 8 semi annual instalments from 10th October,2008, secured by exclusive charge on the entire movable fixed assets at SEZ, Indore, Pithampur and pari passu first charge on movable fixed assets at Kandla.

BNP PARIBAS, Singapore Branch - a) Rs.50.88 Crores (Previous year Rs.56.49 Crores) Repayable in 4 equal semi annual installments from 20th March,2013 , secured by first pari passu charge by way of hypothecation of movable fixed assets both present and future except on movable fixed assets at Pithampur, Indore.

b) Rs.50.88 Crores (Previous year Rs. NIL) Bullet Repayment at the end of 5th year on 6th October,2016 ,Secured by first pari passu charge by way of hypothecation of movable fixed assets both present and future except on movable fixed assets at Pithampur, Indore.

CITI Bank N.A. Bahrain Branch - Rs.19.99 Crores (Previous year Rs. 22.30 Crores) Repayable in 14 equal quarterly installments from 21st July,2011, secured by first pari passu charge by way of hypothecation of all the movable fixed assets both present and future except on movable fixed assets at Pithampur, Indore.

DBS Bank, Singapore Branch - Rs. 34.09 Crores (Previous year Rs. 39.69 Crores) Repayable in 9 semi annual instalments from 16th March,2011, secured by first pari passu charge by way of hypothecation of all the movable fixed assets both present and future except on movable fixed assets at Pithampur, Indore.

Barclays Bank PLC, London Branch - Rs. 50.88 Crores (Previous year Rs. 44.60 Crores) Repayable in 13 quarterly installments from 24th May,2012, secured by first pari passu charge on the plant & machinery of the Company except assets at Pithampur, Indore.

HSBC Mauritius - Rs. 101.76 Crores (Previous year Rs. NIL) Repayable in 7 half yearly installments from 31st July,2013, secured by first pari passu charge on the plant & machinery of the Company except assets at Pithampur, Indore.

Loans and advances to subsidiary companies (Sr. No. i to iv) are without interest and there is no repayment schedule fixed. Loans and advances to subsidiary/associate (Sr. No. v to x) are interest bearing loans.

b) Investment by the loanee in the shares of the Company :

None of the loanees have, per se , made investments in the shares of the Company.

To align the depreciation policy and the rates of the amalgamating (transferee) Company with those of the amalgamated (transferor) Company, the depreciation hitherto charged on the assets of the amalgamated Company has been reviewed and differential depreciation as compared to the policy and rates of the amalgamated Company is written back as at 01/04/2011, being the appointed date. The differential depreciation charged in the books of the amalgamating Company as compared to the method and rates followed by the amalgamated Company is Rs. 5.70 crores and is written back to the profit and loss account under the head depreciation. The Depreciation for the year is therefore lower and the Profit and Balance in Reserves and Surplus is higher by Rs. 5.70 crores.

1. Disclosure as required by Accounting Standard - AS 17 "Segment Reporting", issued by the Institute of Chartered Accountants of India

The entire operations of the Company relate to only one segment viz. pharmaceuticals. As such, there is no separate reportable segment under Accounting Standard - AS 17 on Segment Reporting.

2. Disclosure as required by Accounting Standard - AS 19 "Leases", issued by the Institute of Chartered Accountants of India

The Company has taken various residential / godowns / offices premises (including Furniture and Fittings, if any) under leave and licence agreements. These generally range between 11 months to 3 years under leave and licence basis. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in the Statement of Profit and Loss under Rent.

3. Contingent liabilities and commitments not provided for in respect of :

Particulars 2011 -2012 2010 -2011 Rupees in Crores Rupees in Crores

A. Contingent Liabilities

a) Bills discounted with banks 147.24 106.95

Since Realised (85.08) (47.85)

b) Other moneys for which the Company is contingently liable for tax, excise, customs 18.53* 11.39 and other matters not accepted by the Company

c) Claims against the Company not acknowledged as debts. 0.01 0.01

d) Corporate Guarantees given to bankers of associates - 30.00 and subsidiaries for which the Company holds counter guarantees.

e) Corporate Guarantee given to others 2.28 2.28

f) Guarantees given by banks in favour of Government 65.74 96.75 and others/ Letter of Credit opened against which goods are not received *

148.72 199.53 B. Estimated amount of contracts remaining to be executed on capital account and not provided for :

- Tangible Assets 52.04 78.70

- Intangible Assets 2.44 5.08

54.48 83.78

C. Uncalled liability on partly paid shares 4.48 4.48

D. Other Commitments - -

*Note : It includes Rs. 4.38 crores towards interest and penalty demanded by excise department, Ankleshwar and is not payable in accordance with the order passed by the Hon'ble Central Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad. The Department had moved the Hon'ble Gujarat High Court against the said CESTAt order and as per the order of the said Hon'ble High Court, the Company has furnished a Bank Guarantee of Rs. 2.00 crores to the Department. The Bank guarantee is obtained from Corporation Bank, Kandivali against 100% margin in the form of Fixed Deposit Receipt (FDR).

4. a) The Company has entered into various derivatives transactions, which are not intended for trading or speculative purpose but to hedge the export receivable including future receivables and foreign currency loan interest rate risks.

b) The Company has continued its decision not to exercise the option available under amendment to AS 11 relating to "The effects of Changes in Foreign Exchange Rates" in respect of its Long Term Foreign Currency Monetary Items in respect of foreign currency loans for the acquisition of fixed assets.

d) The Company has an annual average exports of USD 291 Million (Previous year USD 224 Million) of which the Company has partially hedged its receivables by the aforesaid options disclosed in para (a) above. The unhedged currency risk detailed in para (c) above has a natural hedge against the unhedged export receivables of USD 4.58 Million (Previous year USD 17.63 Million) as at 31st March, 2012.

5. In the opinion of the Board of Directors, all the assets other than fixed assets and non current investments have value on realisation in the ordinary course of business atleast equal to the amount at which they are stated in the Balance Sheet.

6. The balance sheet, Statement of profit and loss, cash flow statement, statement of significant accounting policies and the other explainatory notes forms an integral part of the financial statements of the Company for the year ended 31st March, 2012.

7. Prior Period Comparison

The Company has reclassified the published previous year figures to conform to the norms of the Revised Schedule VI. The adoption of the revised Schedule VI does not impact recognition and measurement principles followed for preparation of the financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of Balance Sheet.


Mar 31, 2011

I. Current Tax:

Current Tax is calculated as per the provisions of the Income tax Act, 1961.

II. Deferred Tax:

Deferred Tax is recognized on timing differences being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets, subject to the consideration of prudence are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on balance sheet date.

III. In view of judicial pronouncements and in accordance with advice of the Companys Tax Advisor, no provision has been made for the completed assessments, which are in appeal.

IV. MAT Credit:

MAT Credit entitlement is recognized only when the Company actually avails the MAT credit based on its annual tax computation.

s) Provisions, Contingent Liabilities and Contingent Assets

A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent Liabilities are not recognised but disclosed in notes to accounts. Contingent assets are neither recognised nor recorded in financial statements.

t) Government Grants

The Company accounts government grants relating to specific fixed assets as deferred income and recognises the same proportionately over the useful life of the asset.

u) Cash and Cash Equivalents

Cash and cash equivalents in the Balance Sheet comprise cash at bank,cheques on hand, cash in hand and short term investments with an original maturity of three months or less.

31.03.2011 31.03.2010 Rupees in Crores Rupees in Crores

2. Contingent liabilities not provided for in respect of :

a) Bills discounted with banks. 106.95 87.00

Since realized 47.85 26.48

b) Other moneys for which the Company is contingently liable for tax, excise, customs and other matters not accepted by the Company. 11.39 30.31

c) Claims against the Company not acknowledged as debts. 0.01 0.10

d) Corporate Guarantees given to bankers of associates & subsidiaries for which the Company 30.00 30.00 holds counter guarantees.

e) Corporate Guarantee given to others 2.28 2.28

f) Guarantees given by banks in favour of Govt. & others/ Letter of Credit opened against which 96.75 33.86 goods are not received

g) Uncalled liability on partly paid shares 4.48 -

3. Additional information pursuant to paragraphs 3, 4, 4A, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956

Notes :-

a) As the industrial licensing in respect of drugs and pharmaceuticals produced by the Company has been abolished under the Industrial Policy, the particulars of licensed capacity are not stated.

b) Installed capacity, being of a technical nature is not verified by the Auditors.

c) Production of basic drugs/intermediates includes 1459 tonnes (Previous year 1088 tonnes) used for captive consumption.

d) Production includes production under contract manufacturing.

e) Previous years figures are given in bracket.

4. a) Amount of long term loans repayable in the following 12 months aggregate to Rs. 72.20 crores (Previous year Rs. 41.18 crores). b) During the year the Company had raised and repaid Commercial Paper. The maximum outstanding amount during the year was Rs. 45.00 crores and the Closing balance at year end is Rs. Nil.

5. Provision for taxation includes provision for wealth tax of Rs.0.07 crore (Previous year Rs.0.05 crore).

6. In the opinion of the Board of Directors, all the current assets, loans & advances have value on realisation atleast of an amount equal to the amount at which they are stated in the Balance Sheet.

7. Bank balances :

a) Balances with scheduled banks in Schedule 8 include Rs.1.20 crore (Previous year Rs. 1.16 crore) in unpaid dividend account.

8. The disclosure of information related to Micro, Small and Medium Enterprises creditors is made on the basis of information of registration under the Micro, Small and Medium Enterprises Development Act 2006 given to the Company by the creditors. This information is relied upon by the auditors.

9. Managerial Remuneration :

Managerial Remuneration does not include Stock Option Compensation cost relating to Joint managing Director & Independent Directors of Rs.0.01 crore (previous year Rs. 0.04 crore) charged to Profit & Loss Account.

10. Unpaid dividend does not include any amount to be credited to Investor Education and Protection fund.

11. a) The Company has made provision for diminution in the value of Investments in shares of Ipca Traditional Remedies Pvt. Ltd. and Ipca Pharmaceuticals Inc. USA for Rs.2.96 crores and Rs. 7.00 crores respectively.

b) The diminution in the value of investments in shares of Tonira Pharma Ltd. determined on the basis of market price as on 31st March, 2011 is not considered permanent based on the intrinsic value of the company. Consequently no provision for diminution in the value of investments in said Tonira Pharma Ltd. is considered necessary.

12. Disclosure under Accounting Standard -29 "Provisions, Contingent Liabilities and Contingent Assets".

(Rupees in Crores) Particulars Opening Additions during Amounts paid / Closing Balance the year reversed Balance during the year

Provision for wage revision under negotiation 0.79 1.86 - 2.65

(Previous Year) (0.51) (0.28) - (0.79)

13. c) ESOS Commitment Deposit:

Amount received from employees/directors on grant of stock options pending exercise/allotment of shares is shown as share application money pending allotment.

Note : i) Employers contribution includes payments made by the Company directly to its past employees.

ii) The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

iii) The Companys Gratuity fund is managed by Life Insurance Corporation of India. The plan assets under the fund are deposited under approved securities.

14. Disclosure under Accounting Standard – 19 "Leases", issued by the Institute of Chartered Accountants of India:

The Company has taken various residential / godowns / office premises (including Furniture and Fittings if any) under leave and licence agreements for periods which generally range between 11 months to 3 years. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in the Profit and Loss Account under Rent.

15. a) The Company has entered into various derivatives transactions, which are not intended for trading or speculative purpose but to hedge the export receivable including future receivables and foreign currency loan interest rate risks.

b) The Company has continued its decision not to exercise the option available under amendment to AS 11 relating to "The effects of Changes in Foreign Exchange Rates" in respect of its Long Term Foreign Currency Monetary Items in respect of foreign currency loans for the acquisition of fixed assets.

d) The Company has an annual average exports of USD 224 Million of which the Company has partially hedged its receivables by the aforesaid options disclosed in para (a) above. The unhedged currency risk detailed in para (c) above has a natural hedge against the unhedged export receivables of USD 17.63 Million (Previous year USD 14.04 Million) as at 31st March,2011.

16. The entire operations of the Company relate to only one segment viz. pharmaceuticals. As such, there is no separate reportable segment under Accounting Standard - AS 17 on Segment Reporting.

17. Related Party Disclosure as required by Accounting Standard – AS 18 issued by the Institute of Chartered Accountants of India.

Relationships:

A. Entities where control exists

Shareholders of Ipca Laboratories Ltd

Kaygee Investments Pvt.Ltd.

Chandurkar Investments Pvt.Ltd.

Subsidiaries

Laboratories Ipca Do Brasil Ltda, Brazil (Under liquidation)

Ipca Pharmaceuticals, Inc. USA

Ipca Laboratories U.K. Ltd. United Kingdom

Ipca Pharma (Australia) Pty Ltd. Australia

Ipca Pharma Nigeria Ltd.,Nigeria

National Druggists (Pty) Ltd.,South Africa

Ipca Pharmaceuticals (Shanghai) Ltd.

Ipca Pharmaceuticals Ltd. Mexico

Ipca Traditional Remedies Pvt. Ltd.

Step-down Subsidiaries

Ipca Pharma (NZ) Pty Ltd., New Zealand.

Joint Venture Company

Activa Pharmaceuticals (FZC), UAE. (Liquidated on 09.03.2010)

B. Key Management Personnel

Mr. Premchand Godha Managing Director

Mr. A.K.Jain Joint Managing Director

Mr. Pranay Godha Executive Director

C. Associates

Paschim Chemicals Pvt.Ltd.

Tonira Pharma Ltd.

Makers Laboratories Ltd.

D. Other Related Parties (Entities in which Directors or their relatives have significant influence)

Nipra Industries Pvt.Ltd.

Keymed

Oscar Industries

Mrs. Usha P. Godha

Prabhat Foundation

Vandhara Resorts Pvt.Ltd.

Loans and advances to subsidiary companies (Sr. No. i to iv) are without interest and there is no repayment schedule fixed. Loans and advances to subsidiary/associate (Sr. No. v to vii) are interest bearing loans subject to repayment within three years.

b) Investment by the loanee in the shares of the Company

None of the loanees have, per se , made investments in the shares of the Company.

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


Mar 31, 2010

1. Amount of long term loans repayable in the following 12 months aggregate to Rs. 41.18 crores (Previous year Rs. 72.00 crores).

2, Provision for taxation includes provision for wealth tax of Rs. 0.05 crore (Previous year Rs,0.05 crore).

3. In the opinion of the Board of Directors, all the current assets, loans & advances have value on realisation atleast of an amount equal to the amount at which they are stated in the Balance Sheet.

4. Bank balances:

a) Balances with scheduled banks in Schedule 8 include Rs.1.16 crore (Previous year Rs. 1.05 crore) in unpaid dividend account.

b) Balances with non-scheduled banks in Schedule 8:

5. The disclosure of information related to Micro, Small and Medium Enterprises creditors is made on the basis of information of registration under the Micro, Small and Medium Enterprises Development Act 2006 given to the Company by the creditors. This information is relied upon by the auditors.

6. Unpaid dividend does not include any amount to be credited to Investor Education and Protection fund.

7. a) The Company has made provision for diminution in the value of Investments in shares of Mangalam Drugs & Organics Ltd. Of Rs.2.99 Crores.

b) The Company has made further provision of Rs. 0,09 crores towards diminution in the value of Investment in respect of its investments in Laboratories Ipca Do Brasil Ltda. (wholly owned subsidiary) on account of the unviability of the business in Brazil. The company will take steps to close down its subsidiary and liquidate its investments.

8. a) In terms of the Scheme of Buy-Back of the Equity Shares of the Company, the Company has upto the closure of the scheme bought back 2,56,219 equity shares of Rs.10 each from open market operations at an average price of Rs. 368.43.These shares have been extinguished and the paid up capital has been reduced accordingly by Rs. 0.26 crore. The cost of purchase in excess of the nominal value of the shares has been debited to General Reserve Account, The Company has also transferred an amount of Rs. 0.26 crore to the Capital Redemption Reserve by debit to the General Reserve as required by the provisions of the Companies Act.

b) The Company has reversed back the proposed dividend of Rs.0.01 crore on equity shares that were extinguished between the date of previous Balance Sheet and the record date for declaration of dividend,

9. Disclosure under Accounting Standard -29 "Provisions, Contingent Liabilities and Contingent Assets",

Note:- The Company has during the year, more specifically on 25.02.10, sub divided the face value of each equity share from Rs. 10 to Rs. 2 each and accordingly issued 5 equity shares of Rs. 2 each against each share of Rs, 10,On account of this sub division, the outstanding equity shares as at 31st March, 2010 is 12,52,27,655 including 15,08,750 equity shares issued on exercise of ESOPs by the employees. The earnings per share for the current year and the previous year is calculated on the face value of Rs. 2 each as required by AS-20, Earnings Per Share, of the Companies (Accounting Standards) Rules, 2006.

10. Interest in Joint Venture:

The Company has a Joint Venture Company in Middle East by name of Activa Pharmaceuticals (FZC), SAIF - Zone, Sharjah in which it has a control of 50%. In the standalone Balance Sheet of the Company, Joint-Venture interest is reported under Long term Investment at Cost. During the year, the said JV has been shut down and liquidated. The excess of Rs. 0.23 crore over the value of Investment has been included in Profit on Sale of Investments, The final accounts post liquidation has been received and necessary effects have been given, Proportionate share of the Company as on 31st March 2010 in the assets, liabilities, income, expenditure, contingent liability and capital commitments of the Joint Venture company is as follows:

11. a) If the compensation cost of shares issued under Employees Stock Option Scheme 2006 (ESOS) is determined in accordance with the fair value approach described in the Guidance Note, the Companys net profit for the year ended March 31, 2010 as reported would change to amounts indicated below:

12. Disclosure under Accounting Standard - 19 "Leases", issued by the Institute of Chartered Accountants of India:

The Company has taken various residential/godowns/office premises (including Furniture and Fittings if any) under leave and licence agreements for periods which generally range between 11 months to 3 years. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognised in the Profit and Loss Account under Rent.

13. a) The Company has entered into various derivatives transactions, which are not intended for trading or speculative purpose but to hedge the export receivable including future receivables and foreign currency loan interest rate risks.

d) The Company has an annual average exports of USD 171 Million of which the Company has partially hedged its receivables by the aforesaid options disclosed in para (a) above. The unhedged currency risk detailed in para (c) above has a natural hedge against the unhedged export receivables of USD 54.01 Million (Previous year 23.44 Million) as at 31st March, 2010.

14, The entire operations of the Company relate to only one segment, viz. pharmaceuticals. As such, there is no separate reportable segment under Accounting Standard - AS 17 on Segment Reporting.

15. Related Party Disclosure as required by Accounting Standard - AS 18 issued by the Institute of Chartered Accountants of India.

16, Details of rounded off amounts

The financial statements are represented in Rupees crore. Those items which are not represented in the financial statement due to rounding off to the nearest Rs. crore are given below.

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

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