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Notes to Accounts of Unichem Laboratories Ltd.

Mar 31, 2022

Optrix Laboratories Private Limited has merged with Optimus Drugs Private Limited on receiving approval for the Scheme of Amalgamation by Hon''ble National Company Law Tribunal (NCLT) on 22nd September, 2021. Hence, number of equity shares held by the Company in ''Optrix Laboratories Private Limited'' have been merged with equity holding in ''Optimus Drugs Private Limited''.

Subsequent to the financial year ended 31st March, 2022, the Company has entered into binding Share Purchase Agreement (‘SPA’) dated 10th May, 2022 with Sekhmet Pharmaventures Private Limited (‘Purchaser’) and Optimus Drugs Private Limited (‘Optimus’) to sell its entire shareholding in Optimus to the Purchaser (‘Transaction’). As per the SPA, the Company will sell 19.97% equity shares on a fully diluted basis in the first tranche and remaining 0.02% equity shares in the second tranche. For the first tranche, total consideration is '' 27,098.99 lakhs and for the second tranche for a price to be determined as per the said SPA after satisfaction of necessary conditions precedent. Fair value gain of '' 7,646.40 lakhs is recognised in Other Comprehensive Income in the current quarter and year ended 31st March, 2022 based on independent valuation report and carrying value of such investment as at balance sheet date is '' 22,595.23 lakhs. The additional fair value gain will be recognised in the subsequent period as per SPA. The Transaction is expected to complete in the subsequent period after satisfaction of necessary condition precedents as mutually agreed between the parties under the SPA.

Based on above, the carrying value of the investments as at 31st March, 2022 is grouped under current investments which was earlier grouped under non-current investments as on 31st March, 2021.

Rights, preferences and restrictions attached to Equity Shares

The Company has one class of equity shares having a par value of '' 2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

During the year ended 31st March, 2018, the Company had concluded the buyback of 20,600,000 equity shares aggregating 22.65% of the paid-up equity share capital of the Company at a price of '' 430 per equity share. The Company had funded the buyback from its securities premium account, general reserve and retained earnings. Further, capital redemption reserve of '' 412.00 lakhs representing the nominal value of the shares bought back had been created as an appropriation from retained earnings. Transaction costs related to buyback were adjusted against retained earnings (net of tax).

In respect of the year ended 31st March, 2022, the Board of Directors at its meeting held on 27th May, 2022 recommended a dividend of '' 4 /- per share to be paid on its fully paid up equity shares having a face value of '' 2/- . This equity dividend is subject to the approval of shareholders at the ensuing Annual General Meeting and has not been included as a liability in these standalone financial statements. The total estimated equity dividend to be paid is '' 2,816.23 lakhs.

During the year, the Company has paid final dividend of '' 4 per equity share declared for the year ended 31st March, 2021 post approval of the shareholders at the AGM held on 31st July, 2021.

(a) March 2022 - Deferred tax assets is recognised on the amount of tax loss, unabsorbed tax depreciation and other temporary differences to the extent of deferred tax liability. Further, deferred tax assets is not recognised on the amount unused tax losses of '' 8,585.25 lakhs (P.Y. Nil)

(b) March 2021 - As at year end, deferred tax liability exceeds the deferred tax assets (including assets in respect of brought forward losses and depreciation) in accordance with the new tax regime. Also MAT credit is not available under the new tax regime. Further, deferred tax liability on fair value gain on equity instruments is net of deferred tax asset on brought forward long term capital loss of '' 734.76 Lakhs

B Other liabilities which are remote in nature

(i) Claims made by the ex-employees whose services have been terminated in earlier years are not acknowledged as debts. The matters are frivolous and are disputed under various forums. However, in the opinion of the management, these claims are not tenable.

(ii) In the earlier period, one party had filed the legal case on the Company for breach of trust and claimed certain compensation / damages. During the current year, this matter is settled in favour of the Company and amount received by the Company on settlement is included in note 29.2.

(iii) The Company is involved in certain intellectual property claims / legal proceedings filed against it by the innovators which are considered to be normal to its business. These proceedings are pending before different authorities / courts . The outcome from these claims are uncertain due to a number of factors involved in legal trial. Often, these issues are subject to uncertainties and therefore the probability of a loss, if any, being sustained and an estimate of the amount of any loss is difficult to ascertain. Although there can be no assurance regarding the outcome of any of the intellectual property claims / legal proceedings referred to in this note, the Company does not expect such liabilities to be significant.

(iv) The Company has filed rectification letters in respect of certain income-tax refunds which have been withheld by the department. The Company is of the view that once the rectification letters are processed by the department, the refunds will be received by the Company.

In respect of matters stated in B (i) to (iv), the possibility of any liability devolving on the Company is remote and hence, no disclosure as contingent liability is considered necessary.

38 On 9th July, 2014, the European Commission (“EU”) decided to impose an unjustified fine of Euro 13.96 million, jointly and severally on the Company and its subsidiary Niche Generics Ltd (“Niche”) contending that they had acted in breach of EU competition law as Niche Generics Ltd had, in early 2005 (when the Company was only a part owner and financial investor in Niche) had agreed to settle a financially crippling patent litigation with Laboratories Servier. The Company vehemently denies any wrongdoing on the part of either itself or Niche. Both the Company & Niche had submitted appeals in September 2014 to the General Court of the EU seeking appropriate relief in the matter. The General Court of the EU has rejected the appeals vide Order dated 12th December, 2018 and confirmed the fine of Euro 13.96 million. The Company and its subsidiary based on legal advice and merits, have filed appeals against the decision of General Court before the Court of Justice of the EU and outcome of the appeals are awaited.

In this regard, the statutory auditors of Niche have given qualified audit opinion on the financial statement of Niche for the year ended 31 st March 2022. They have stated that previously the outcome of the appeal was sufficiently uncertain that a contingent liability was deemed sufficient, however following the hearing in October 2021, and their review of the available documentation, their opinion is that it is more likely than not that Niche will be liable for the fine of Euro 13.96 million (equivalent to '' 11,818.62 lakhs) and hence they believe that this should be provided for in the financial statements of Niche. As per the board of Directors of Niche, there remains an inherent uncertainty as to the outcome of the appeal and therefore the Directors are of the opinion that no provision should be made at this point of time. The management has obtained the counsel view on this matter and they have stated that there has not been any formal change in position after the last hearing and the uncertainty as in the past continues. Considering the status quo, in view of the management, no provision for the aforesaid fine is considered necessary and continued to disclose the matter under contingent liability.

As at Balance Sheet date, the Company has aggregate financial exposure of '' 12,267.33 lakhs in Niche comprising of investment, trade receivable and corporate guarantee given to bank for loan availed by Niche. Considering the impact of on-going litigation as elaborated in the above para and accumulated losses in Niche as at Balance Sheet date, the statutory auditor of the Company are of the view that the Company would need to provide for impairment on the exposure involved of '' 12,267.33 lakhs. However, the Company is of the view that such provision for impairment on exposure would be required only in the event of unfavourable outcome of the appeal which itself is uncertain. On the above matter, the auditors of the Company have given qualified opinion in their audit report on standalone financial statement for the year ended 31st March, 2022.

Further, as per the management the future business outlook and projections of the subsidiary are sufficient so as not to warrant any impairment on the investments in subsidiary (Niche) unless the outcome of EU matter is not in favour of the subsidiary.

39 (a) Estimated amount of Contracts remaining to be executed (Net of Advances) on Capital account '' 13,394.57 lakhs (PY

'' 12,361.67 lakhs) and on other revenue accounts '' 21,147.99 lakhs (PY '' 19,064.57 lakhs) are not provided for.

(b) The Company''s intention is to continue to provide financial support to its subsidiaries [Niche Generics Ltd, Unichem Laboratories Ltd (Ireland) and Unichem Farmaceutica Do Brasil Ltda]. Further, pending outcome of the appeal in respect of European Commission matter (refer note 38), the Company will consider all available options to assist the subsidiary.

40 Credit facilities and term loan facility from Kotak Mahindra Bank availed by the Company and / or its subsidiary, Niche Generics Limited (United Kingdom), are secured by first and exclusive mortgage charge on immovable property being industrial land and building known as Unichem Laboratories Limited on plot bearing CTS No. 510 of village Oshiwara and CTS No.1 of village Majas, Prabhat Estate, Off. S. V Road, Patel Engineering Road, Jogeshwari (West), Mumbai 400 102 and first and exclusive hypothecation charge on movable property, plant and equipment and mortgage charge on immovable properties being Industrial land and building at Goa. Subsequent to the financial year ended 31st March, 2022, the Company has created the mortgage charge on immovable properties at Goa towards credit facilities and term loan facility availed from Kotak Bank.

Further credit facilities from Citibank, N.A. availed by the Company, are secured by way of first and exclusive charge on pledge against investments in mutual funds to the extent of '' 3,762.79 lakhs (PY '' 3,636.95 lakhs). Additionally, credit facilities availed by the Company from Bank of India, Axis Bank and HDFC Bank are secured against hypothecation of stock and debtors.

Additionally, all credit facilities have been registered with Registrar of Companies (ROC) within the prescribed due date except minor delay in case of registration of modification of charge on credit facility availed from Bank of India on account of procedural reasons.

41 As per Ind AS 108 - "Operating Segment", segment information has been provided under the Notes to Consolidated Financial Statements.

42 The Company has reviewed its investments in wholly owned subsidiaries. In respect of its investment in Unichem Farmaceutica Do Brasil Ltda, Brazil, full impairment loss was recognised in earlier years against total investment amount of '' 7,086.72 lakhs (P.Y. '' 7,086.72 lakhs). Impairment loss has been continued after an internal assessment based on circumstances prevailing as at the balance sheet date, such as past performance, results, assets, expected cash flows, projections, status of product approvals, nature of the market and regulatory conditions.

Note: Since the Company has spent in excess of the amount which was required to be spent for FY 2021-22, the Company is entitled to carry forward the amount spent of '' 63.22 lakhs (P.Y '' 328.45 lakhs) to subsequent three financial years respectively which can be set off against CSR obligations of these years. However, for accounting purpose, cumulative excess amount spent of '' 391.67 lakhs is not considered as prepaid expenses.

45 HEDGE ACCOUNTING

The Company has managed the foreign exchange risk with appropriate hedging activities in accordance with policies of the Company. The Company manages currency risk as per trends and experiences. The Company uses forward exchange contracts to hedge against its foreign currency exposures relating to export receivables. The Company does not enter into any derivative instruments for trading or speculative purposes.

The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

These plans typically expose the Company to actuarial risks such as: investment risk, interest risk, longevity risk and salary risk. Investment risk:

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

Interest risk:

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

Longevity risk:

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

Salary risk:

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

1 Number of options pending to be exercised by Mr. Dilip Kunkolienkar as on 31st March, 2022 are 2,46,176 (P.Y. 2,46,176).

2 Key Managerial Personnel and their Relatives who are under the employment of the Company are entitled to post employment benefits and other long term employee benefits recognised as per Ind AS 19 - ‘Employee Benefits’ in the financial statements. As these employee benefits are lump sum amounts provided on the basis of actuarial valuation, the same is not included above. Further, it also does not include actual payments of gratuity and leave encashment. Also, reimbursement of expenses to KMP and their relatives are not included above.

3 Related party contracts / arrangements have been entered in ordinary course of business and are approved by the board of directors/ shareholders as applicable.

b) The Company has taken flats / office premises, vehicles and other machinery on cancellable operating leases. There are no restrictions imposed by lease arrangements. For such lease arrangement with lease terms of 12 months or less, the Company has applied the ‘short-term lease’ recognition exemptions. There are no sub-leases. The deposit amount are refundable on completion / cancellation of lease term.The aggregate lease rentals charged as lease rent to the statement of profit and loss in current year is '' 109.30 lakhs (P.Y. '' 140.36 lakhs) and is grouped under note 35 (rent and establishment & administrative expenses).

Determination of fair values:

The following are the basis of assumptions used to estimate the fair value of financial assets and liabilities that are measured at fair value on recurring basis.

Investment in mutual funds & bonds:

The fair values represent net asset value as stated by the issuers of these mutual fund units in the published statements. Net asset values represent the price at which the issuer will issue further units in the mutual fund and the price at which issuers will redeem such units from the investors.

Equity investments :

a) Equity investments traded in an active market determined by reference to their quoted market prices.

b) Investments which are designated through other comphrensive income are fair valued and the changes in fair value is recognised in other comprehensive income. There are no gains / losses from such investments.

Derivative instruments: For forward contracts and cross currency interest rate swaps, future cash flows are estimated based on forward exchange rates and forward interest rates (from observable forward exchange rates / yield curves at the end of the reporting period) and contract forward exchange rates and forward interest rates, discounted at a rate that reflects the credit risk of respective counterparties.

55 FINANCIAL RISK MANAGEMENT

The Company’s activities are exposed to variety of financial risks. These risks include market risk (including foreign exchange risk and interest rate risks), credit risks and liquidity risk. The Company’s overall risk management program seeks to minimize potential adverse effects on the financial performance of the Company through established policies and processes which are laid down to ascertain the extent of risks, setting appropriate limits, controls, continuous monitoring and its compliance.

Market risk:

Market risk refers to the possibility that changes in the market rates may have impact on the Company’s profits or the value of its holding of financial instruments. The Company is exposed to market risks on account of foreign exchange rates, interest rates and underlying equity prices.

Foreign currency exchange rate risk:

The Company’s foreign currency risk arises from its foreign operations, investments in foreign subsidiaries and foreign currency transactions. The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company.

Since a major part of the Company’s revenue is in foreign currency and major part of the costs are in Indian Rupees, any movement in currency rates would have impact on the Company’s performance. Consequently, the overall objective of the foreign currency risk management is to minimize the short term currency impact on its revenue and cash-flow in order to improve the predictability of the financial performance.

The major foreign currency exposures for the Company are denominated in USD & EURO. Additionally, there are transactions which are entered into in other currencies and are not significant in relation to the total volume of the foreign currency exposures. The Company hedges all trade receivables upto a maximum of 6 months forward based on historical trends. Hedge effectiveness is assessed on a regular basis.

Interest Rate Risk:

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates and where the borrowings are measured at fair value through profit or loss. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments or borrowings will fluctuate because of fluctuations in the interest rates.

Exposure to interest rate risk

The Company adopts a policy of ensuring that maximum of its interest rate risk exposure is at a fixed rate and there are no financial instruments with floating interest rates.

Credit risk:

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Financial instruments that are subject to concentrations of credit risk materially consists of trade receivables, investments and derivative financial instruments.

All trade receivables are subject to credit risk exposure. The Company’s exposure to credit risk is influenced mainly by the individual characteristics 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 established policies, controls relating to credit approvals and procedures for continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables (other than from subsidiaries) and unbilled revenues. The Company does not have significant concentration of credit risk related to trade receivables. In the current year, there is no single external party customer which contributes to more than 10% of outstanding accounts receivable (excluding outstanding from subsidiaries) as of 31 st March, 2022. In previous year, there was no single external party customer which contributed to more than 10% of outstanding accounts receivable (excluding outstanding from subsidiaries) as of 31st March, 2021 .(refer note 38)

The Company limits its exposure to credit risk by generally investing in liquid securities having and only with counterparties that have a good credit rating. The company does not expect any losses from non- performance by these counter-parties, and does not have any significant concentration of exposures to specific industry sectors.

None of the financial instruments of the company result in material concentration of credit risk. Geographic concentration of credit risk relating to trade receivable (other than subsidiaries) is predominantly there in USA i.e. above 10% and less than 10% in other countries. Refer note 12 for movement in expected credit loss allowance.

Liquidity risk:

Liquidity risk refers to the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company generates cash flows from operations to meet its financial obligations, maintains adequate liquid assets in the form of cash & cash equivalents and has undrawn short term line of credits from banks to ensure necessary liquidity.

Capital Management

Equity share capital and other equity (other than ESOP Reserve and Other comprehensive income) are considered for the purpose of Company’s capital management (refer Statement of Changes in Equity of standalone financial statement). There are no externally imposed capital requirements on the Company. The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Company monitors the return on capital as well as the level of dividends on its equity shares. The Company’s objective when managing capital is to maintain an optimal structure so as to maximize shareholder value.

The Company is predominantly equity financed. Further, the company’s current assets has always been higher than the liabilities. Also current assets includes cash and bank balances along with investment which is predominantly investment in liquid and short term mutual funds being far in excess of borrowings / debt.

No changes were made in the objectives, policies or processes for managing capital during the year ended 31st March, 2022 and 31st March, 2021.

As on 31st March, 2022, the Company has not been declared wilful defaulter by any bank/ financial institution or other lender.

The Company is not engaged in the business of trading or investing in crypto currency or virtual currency and hence no disclosure is required.

The Company has complied with number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of layers) Rules, 2017.

The Company has not advanced any funds or loaned or invested by the Company to or in any other person(s) or entities, including foreign entities (“Intermediaries”), with the understanding that the intermediary shall whether directly or indirectly lend or invest in other persons or entities identified in any manner by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of ultimate beneficiaries.

The Company has not received any funds from any person(s) or entities including foreign entities (“Funding Parties”) with the understanding that such entity shall whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funding party (ultimate beneficiaries) or provide guarantee, security or the like on behalf of the Ultimate beneficiaries.

No proceedings have been initiated or are pending against the Company as on 31st March, 2022 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.

The Company does not have any transaction with companies struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956 and hence, no disclosure is required.

The Company has not entered into any scheme of arrangements in terms of sections 230 to 237 of the Companies Act, 2013.

There is no transaction that is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.


Mar 31, 2019

1. On 9th July, 2014, the European Commission (“EU”) decided to impose an unjustified fine of Euro 13.96 million, jointly and severally on the Company and its subsidiary Niche Generics Ltd (“Niche”) contending that they had acted in breach of EU competition law as Niche Generics Ltd had, in early 2005 (when the Company was only a part owner and financial investor in Niche) had agreed to settle a financially crippling patent litigation with Laboratories Servier. The Company vehemently denies any wrongdoing on the part of either itself or Niche. Both the Company & Niche had submitted appeals in September 2014 to the General Court of the EU seeking appropriate relief in the matter. The General Court of the EU has rejected the appeals vide Order dated 12th December 2018 and confirmed the fine of Euro 13.96 million. The Company and its subsidiary based on legal advice and merits, has filed an appeal against the decision of General Court before the Court of Justice of the EU and outcome of the appeal is awaited. Considering the above, in view of the management, no provision for the aforesaid fine is considered necessary. Based on above, fine imposed by the EU of Euro 13.96 million (equivalent to Rs,10,890.20 lakhs) is disclosed under contingent liability in current year.

2. (a) Estimated amount of Contracts remaining to be executed (Net of Advances) on Capital account Rs,10,180.71 lakhs (P.Y.

Rs,3,167.75 lakhs) and on other revenue accounts Rs,17,941.32 lakhs (P.Y. Rs,13,104.27 lakhs) are not provided for.

(b) The CompanyRs,s intention is to continue to provide financial support to its subsidiaries [Niche Generics Ltd & Unichem Laboratories Ltd ( Ireland)) and Unichem Farmaceutica Do Brasil Ltda]. Further, pending outcome of the appeal in respect of European Commission matter (refer note 35), the Company will consider all available options to assist the subsidiary.

3. (a) Loan from Biotechnology Industry Research Assistance Council (BIRAC) was fully repaid during the year and was secured against

hypothecation of movable properties including any and all equipment , apparatus machineries , machineries spares , tools and other accessories , goods and / or other moveable property , present and future , situated at Bio -technology R&D Centre , Goa.

(b) Credit facilities from Citibank, N.A. availed by the Company and its subsidiaries [Unichem Laboratories Limited(Ireland), Unichem Pharmaceuticals (USA) Inc. (USA), Niche Generics Limited(United Kingdom)] are secured by way of a pledge against investments in mutual funds to the extent of Rs,32,217.32 lakhs. (P.Y. Rs,33,084.66 lakhs). Out of Rs,32,217.32 lakhs, the Company is in process of completing pledge formalities in respect of mutual funds of Rs,26,949.12 lakhs (P.Y. Rs, Nil).

4. As per Ind AS 108- "Operating Segment", segment information has been provided under the Notes to Consolidated Financial Statements.

5. The Company has reviewed its investments in wholly owned subsidiaries. In respect of its investment in Unichem Farmaceutica Do Brasil Ltda , Brazil , Impairment loss recognized for this investment for the year Rs,302.83 Lakhs ( P.Y. Rs,511.71 Lakhs). This has resulted in the aggregate Impairment loss to Rs,7,086.72 Lakhs ( P.Y Rs,6,783.89 Lakhs) on a total investment of Rs,7,086.72 Lakhs ( P.Y. Rs,6,783.89 Lakhs ). Impairment loss for the current year is charged to statement of profit and loss after an internal assessment based on circumstances prevailing as at the balance sheet date, such as past performance, results ,assets, expected cash flows, projections, status of product approvals , nature of the market and regulatory conditions.

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The discounting rate is based on material yield on government bonds having currency and terms consistent with the currency and terms of post-employment benefit obligations. The overall expected rate of return on assets is based on the LIC structure of interest rates on gratuity funds.

The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

These plans typically expose the Company to actuarial risks such as: investment risk, interest risk, longevity risk and salary risk. Investment risk:

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

Interest risk:

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

Longevity risk:

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

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

Asset-liability matching strategies

The trustees of the plan have outsourced the investment management of the fund to an insurance company. The insurance company in turn manages these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations. Due to the restrictions in the type of investments that can be held by the fund, it may not be possible to explicitly follow an asset-liability matching strategy to manage risk actively in a conventional fund.

6. RELATED PARTY DISCLOSURES

Disclosure of related parties / related party transactions pursuant to Ind AS 24 "Related Party Disclosure".

(a) List of related parties

(i) Subsidiaries of the Company (Wholly Owned) : (ii) Enterprises under significant influence of

key management personnel as defined in (iii)

(disclosed to the extent of transactions)

Niche Generics Limited. (United Kingdom) Uni - Distributors Pvt. Ltd.

Unichem SA Pty. LTD. (South Africa) Elemage Wellness LLP

Unichem Farmaceutica Do Brasil Ltda (Brazil) Adiwasi Unnati Mandal

Unichem Pharmaceuticals (USA) Inc. (USA) Uni Trust

Unichem Laboratories Ltd (Ireland) Also Refer note (f)

(iii) Key management personnel and their relatives: (iv) Independent Directors:

(disclosed to the extent of transactions)

Dr. Prakash A. Mody Dr. (Mrs.) B. Kinnera Murthy

(Chairman & Managing Director - CMD Promoter) Mr. Anand Y Mahajan

Mrs. Anita Mody (Spouse of CMD) Mr. Prafull Anubhai

Ms. Supriya Mody (Daughter of CMD) Mr. Prafull D Sheth

Ms. Suparna Mody (Daughter of CMD) Mr. Ramdas M Gandhi (upto 09.05.2018)

Mr. Dilip J. Kunkolienkar (Director - Technical)

(w.e.f 01.04.2018)

(v) Post-employment benefit plans: (vi) Key management personnel and their:

relatives as per Companies Act, 2013.

Unichem Laboratories Ltd-Employees Gratuity Fund Mr. Rakesh Parikh -

Unichem Laboratories Ltd-Employees (Chief Finance & Compliance Officer)(upto 31.08.2018)

Superannuation Fund Rakesh Parikh - HUF (upto 31.08.2018)

Mrs. Neema Thakore - (Head - Legal & Company Secretary) Mr. Sandip R.Ghume (Dy. Chief Financial Officer)

(w.e.f 31.10.2018)

Determination of fair values: The following are the basis of assumptions used to estimate the fair value of financial assets and liabilities that are measured at fair value on recurring basis.

Investment in mutual funds : The fair values represent net asset value as stated by the issuers of these mutual fund units in the published statements. Net asset values represent the price at which the issuer will issue further units in the mutual fund and the price at which issuers will redeem such units from the investors.

Equity investments : a) Equity investments traded in an active market determined by reference to their quoted market prices.

b)During the year the Company has made investments in equity shares of unlisted companies aggregating to ''12,000.62 lakhs. The Company has elected to categorize these investment as fair value through other comprehensive income. Based on the overall evaluation carried out by the Company of the investee company and considering no significant variation in their financial performance, cost of these investment is considered as an appropriate estimate of fair value as at Balance Sheet date. During the year there are no gains / losses from such investments.

Derivative instruments : For forward contracts and cross currency interest rate swaps, future cash flows are estimated based on forward exchange rates and forward interest rates (from observable forward exchange rates / yield curves at the end of the reporting period) and contract forward exchange rates and forward interest rates, discounted at a rate that reflects the credit risk of respective counterparties.

7.FINANCIAL RISK MANAGEMENT

The Company’s activities are exposed to variety of financial risks. These risks include market risk (including foreign exchange risk and interest rate risks), credit risks and liquidity risk. The Company’s overall risk management program seeks to minimize potential adverse effects on the financial performance of the Company through established policies and processes which are laid down to ascertain the extent of risks, setting appropriate limits, controls, continuous monitoring and its compliance.

Market risk:

Market risk refers to the possibility that changes in the market rates may have impact on the Company’s profits or the value of its holding of financial instruments. The Company is exposed to market risks on account of foreign exchange rates, interest rates and underlying equity prices.

Foreign currency exchange rate risk:

The Company’s foreign currency risk arises from its foreign operations, investments in foreign subsidiaries and foreign currencytransactions. The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity,where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than thefunctional currency of the Company. Since a major part of the Company’s revenue is in foreign currency and major part of thecosts are in Indian Rupees, any movement in currency rates would have impact on the Company’s performance. Consequently,the overall objective of the foreign currency risk management is to minimize the short term currency impact on its revenue andcash-flow in order to improve the predictability of the financial performance.The major foreign currency exposures for theCompany are denominated in USD & EURO. Additionally, there are transactions which are entered into in other currencies and arenot significant in relation to the total volume of the foreign currency exposures. The Company hedges all trade receivables upto amaximum of 6 months forward based on historical trends. Hedge effectiveness is assessed on a regular basis.The following tablesets forth information relating to foreign currency exposure from USD, EUR and other currencies (which are not material) formnon-derivative financial instruments: _

Interest Rate Risk:

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates and where the borrowings are measured at fair value through profit or loss. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments or borrowings will fluctuate because of fluctuations in the interest rates.

Exposure to interest rate risk:

The Company adopts a policy of ensuring that maximum of its interest rate risk exposure is at a fixed rate and there are no financial instruments with floating interest rates.

Credit risk:

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Financial instruments that are subject to concentrations of credit risk materially consists of trade receivables, investments and derivative financial instruments.

All trade receivables are subject to credit risk exposure. The Company’s exposure to credit risk is influenced mainly by the individual characteristics 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 established policies, controls relating to credit approvals and procedures for continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables (other than from subsidiaries) and unbilled revenues. The Company does not have significant concentration of credit risk related to trade receivables. In the current year there is a single third party customer which contributes to more than 10% of outstanding accounts receivable (excluding outstanding from subsidiaries) as of 31st March 2019. In previous year, no single third party customer contributes to more than 10% of outstanding accounts receivable (excluding outstanding from subsidiaries).

The Company limits its exposure to credit risk by generally investing in liquid securities having and only with counterparties that have a good credit rating. The company does not expect any losses from non- performance by these counter-parties, and does not have any significant concentration of exposures to specific industry sectors.

None of the financial instruments of the company result in material concentration of credit risk. Geographic concentration of credit risk relating to trade receivable (other than subsidiaries) is predominantly there in USA i.e. above 10% and less than 10% in other countries. Refer note no. 11 for movement in expected credit loss allowance.

Liquidity risk:

Liquidity risk refers to the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company generates cash flows from operations to meet its financial obligations, maintains adequate liquid assets in the form of cash & cash equivalents and has undrawn short term line of credits from banks to ensure necessary liquidity.

*Excluding amortized cost adjustment.

Capital Management

Equity share capital and other equity (other than ESOP Reserve and Other comprehensive income) are considered for the purpose of Company’s capital management (refer Statement of Changes in Equity of standalone financial statement). There are no externally imposed capital requirements on the Company. The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.

The Company monitors the return on capital as well as the level of dividends on its equity shares. The Company’s objective when managing capital is to maintain an optimal structure so as to maximize shareholder value.The Company is predominantly equity financed. Further, the company’s current assets has always been higher than the liabilities. Also current assets includes cash and bank balances along with investment which is predominantly investment in liquid and short term mutual funds being far in excess of borrowings / debt.

No changes were made in the objectives, policies or processes for managing capital during the year ended 31st March, 2019 and 31st March, 2018.


Mar 31, 2018

1. Company Overview

Unichem Laboratories Limited (“the Company”) is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 1956. Its shares are listed and traded on Bombay Stock Exchange and National Stock Exchange in India. The registered office of the Company is located at “Unichem Bhavan”, Prabhat Estate, off S V Road, Jogeshwari (west), Mumbai 400 102.

The Company is engaged in manufacturing of pharmaceutical products.

The financial statements of the Company for the year ended 31st March 2018 were approved and adopted by board of directors of the Company in their meeting dated 29th May, 2018.

Rights, preferences and restrictions attached to Equity Shares.

The Company has one class of equity shares having a par value of Rs.2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

* Consequent upon buyback during the year, there is reduction in individual shareholding as compared to 31st March 2017. However, on promoter group basis, there is no dilution in shareholding as on 31st March 2018 as compared to 31st March 2017.

As per the records of the Company, including its register of shareholders / members & other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

2.1 During the quarter ended 31st March, 2018, the Company has concluded the buyback of 20,600,000 equity shares aggregating 22.65% of the paid-up equity share capital of the Company at a price of Rs.430 per equity share. The Company has funded the buyback from its securities premium account, general reserve and retained earnings. Further, capital redemption reserve of Rs.412.00 lakhs representing the nominal value of the shares bought back has been created as an appropriation from retained earnings. Transaction costs related to buyback are adjusted against retained earnings(net of tax).

2.2 In respect of the year ended 31 st March,2018, the Board of Directors at its meeting held on 29th May, 2018 recommended a dividend of Rs.5/- per share to be paid on its fully paid up equity shares having a face value of Rs.2/- . This equity dividend is subject to the approval of shareholders at the ensuing Annual General Meeting and has not been included as a liability in these standalone financial statements. The total estimated equity dividend (including tax on dividend ) to be paid is Rs.4239.75 Lakhs.

The Company has taken term loan from BIRAC carrying interest at the rate of 2% per annum, repayment in 10 equal half yearly instalments commencing from 14th Oct, 2016. (Refer note No. 37 (b))

Using prevailing market rates for an equivalent loan of 10 %, the fair value of the loan at initial recognition is estimated at Rs.37.66 Lakhs. The difference of Rs.13.77 Lakhs between gross proceeds and the fair value of the loan is the benefit derived from the below market interest loan and is recognised as deferred revenue (Note - 24). Interest expenses of Rs.4.34 Lakhs was recognised of the year ended 31st March 2018 (PY. Rs.4.19 Lakhs) (Note 31).

* MAT credit for earlier year is recognised to the extent of utilisation in current year.

** Excess provision for income tax (net) of earlier years is on account of reworking the provision for tax in respect of earlier years on the basis of acceptance of the Company’s view in computation of tax liability under u/s 115JB (MAT) of the Income tax Act, 1961 as per assessment order passed by the tax authority.

3.1 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act,2006 to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made. The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

4.1 It includes Rs.51.45 lakhs ( P.Y. Nil ) of grants relating to property, plant and equipment imported under the EPCG scheme. Under such scheme, the Company is committed to export prescribed times of the duty saved on import of capital goods over a specified period of time. In case such commitments are not met, the Company would be required to pay the duty saved along with interest to the regulatory authorities.

The Company has made provision towards expected returns from market which are primarily in the nature of expired or near expiry products and other claims. Cash outflow is expected within 12 months from balance sheet date. The Company does not expect any reimbursement in regards to the provision made.

* includes Rs.120.58 lakhs (P.Y Rs.109.19 Lakhs ) paid under protest/deposit pending adjudication under Income tax Act, 1961 and Central Excise Act 1944.

(v) Claims made by the ex-employees whose services have been terminated in earlier years are not acknowledged as debts, the exact liability, whereof is not ascertainable. The matters are disputed under various forums. However in the opinion of the management, these claims are not tenable.

5 On 9th July, 2014, the European Commission (“EU”) decided to impose an unjustified fine of € 13.97 million (equivalent to Rs.11,267.85 lakhs), jointly and severally on the Company and its subsidiary Niche Generics Ltd (“Niche”) contending that they had acted in breach of EU competition law as Niche Generics Ltd had, in early 2005 (when The Company was only a part owner and financial investor in Niche) had agreed to settle a financially crippling patent litigation with Laboratories Servier. The Company vehemently denies any wrongdoing on the part of either itself or Niche. Both The Company & Niche have submitted appeal in September 2014 to the EU General Court seeking appropriate relief in the matter. The outcome of the appeal is likely to follow some months after (early 2018 at the earliest), as advised by lawyers of the Niche. The appeal process before EU Courts is very slow and as this is a very complex matter, it is possible that the case may take even longer to be concluded.

6 Estimated amount of Contracts remaining to be executed (Net of Advances) on Capital account Rs.3,167.75 lakhs (P.Y. Rs.5,334.17 lakhs) and on other revenue accounts Rs.13,104.27 lakhs (P.Y. Rs.14,574.59 lakhs) are not provided for.

7 (a) Cash credit Rs. Nil (P. Y. Rs.55.14 Lakhs) in Joint consortium from Bank of India and Bank of Baroda are secured against hypothecation of Stocks and Book debts both present and future situated at various locations of the Company

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

(c) Credit facilities from Citibank, N.A. availed by the Company and its subsidiaries [Unichem Laboratories Limited(Ireland), Unichem Pharmaceuticals (USA) Inc. (USA), Niche Generics Limited(United Kingdom)] are secured against investments in mutual funds to the extent of Rs.33,084.66 Lakhs.In the previous year credit facilities to subsidiaries were secured by :

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

(ii) first exclusive charge on immovable property situated at Pithampur, Madhya Pradesh and Baddi, Himachal Pradesh.

8 As per Ind AS 108- “Operating Segment”, segment information has been provided under the Notes to Consolidated Financial Statements.

9 The Company has reviewed its investments in wholly owned subsidiaries. In respect of its investment in Unichem Farmaceutica Do Brasil Ltda, Brazil, Impairment loss recognised for this investment for the year Rs.511.71 Lakhs (P.Y. Rs.2,690.78 Lakhs). This has resulted in the aggregate Impairment loss to Rs.6,783.89 Lakhs (P.Y. Rs.6,272.19 Lakhs) on a total investment of Rs.6,783.89 Lakhs (P.Y. Rs.6,272.19 Lakhs). Impairment loss for the current year is charged to statement of profit and loss after an internal assessment based on circumstances prevailing as at the balance sheet date, such as past performance, results ,assets, expected cash flows, projections, status of product approvals , nature of the market and regulatory conditions.

10 CORPORATE SOCIAL RESPONSIBILITY

a) Gross amount required to be spent by the company during the year: Rs.272.99 Lakhs (PY Rs.279.32 Lakhs)

b) Amount spent during the year on:

11 HEDGE ACCOUNTING

The Company has managed the foreign exchange risk with appropriate hedging activities in accordance with policies of the Company. The Company’s manages currency risk as per trends and experiences. The Company uses forward exchange contracts to hedge against its foreign currency exposures relating to export receivables. The Company does not enter into any derivative instruments fortrading or speculative purposes.

12 EMPLOYEE BENEFITS

The Company has a defined benefit gratuity plan. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

Other long term benefits comprises of leave entitlements to the employees. This benefit is partly funded by the Company.

The estimates of future salary increases considered In actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand In the employment market. The discounting rate Is based on material yield on government bonds having currency and terms consistent with the currency and terms of post-employment benefit obligations. The overall expected rate of return on assets is based on the LIC structure of interest rates on gratuity funds.

The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

These plans typically expose the Company to actuarial risks such as: investment risk, interest risk, longevity risk and salary risk.

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

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

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

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

Expected contribution and weighted average duration for defined benefit obligation

Asset-liability matching strategies

The trustees of the plan have outsourced the investment management of the fund to an insurance company. The insurance company in turn manages these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations. Due to the restrictions in the type of investments that can be held by the fund, it may not be possible to explicitly follow an asset-liability matching strategy to manage risk actively in a conventional fund.

13 RELATED PARTY DISCLOSURES

Disclosure of related parties / related party transactions pursuant to Ind AS 24 “Related Party Disclosure”.

(a) List of related parties

(i) Subsidiaries of the Company (Wholly Owned) :

Niche Generics Limited. (United Kingdom)

Unichem SA Pty. LTD. (South Africa)

Unichem Farmaceutica Do Brasil Ltda (Brazil) Unichem Pharmaceuticals (USA) Inc. (USA)

Unichem Laboratories Ltd (Ireland)

(iii) Key management personnel and their relatives: (disclosed to the extent of transactions)

Dr. Prakash A. Mody

(Chairman & Managing Director - CMD, Promoter) Mrs. Anita Mody (Spouse of CMD)

Ms. Supriya Mody (Daughter of CMD)

Ms. Suparna Mody (Daughter of CMD)

(v) Post-employment benefit plans:

Unichem Laboratories Ltd-Employees Gratuity Fund Unichem Laboratories Ltd-Employees Superannuation Fund

(ii) Enterprises under significant influence of key management personnel as defined in (iii)

(disclosed to the extent of transactions)

Uni - Distributors Pvt. Ltd.

Uni Trust

Adiwasi Unnati Mandal

(iv) Independent Directors:

Dr. (Mrs.) B. Kinnera Murthy Mr. Anand Y. Mahajan Mr. Prafull Anubhai Mr. Prafull D Sheth Mr. Ramdas M Gandhi

(vi) Key management personnel and their: relatives as per Companies Act, 2013.

Mr. Rakesh Parikh - (Chief Finance & Compliance Officer) Rakesh Parikh - HUF

Mrs. Neema Thakore - (Head - Legal & Company Secretary)

1 Number of option pending to be exercised by Mr. Rakesh Parikh as on 31st March,2018 are 27,500 (Previous year 42,600).

2 Key Managerial Personnel and their Relatives who are under the employment of the Company are entitled to post employment benefits and other long term employee benefits recognised as per Ind AS 19 - ‘Employee Benefits’ in the financial statements. As these employee benefits are lump sum amounts provided on the basis of actuarial valuation, the same is not included above. Further re-imbursement of expenses to KMP and their relatives are not included above

3 Director’s remuneration for the year 2017-2018 is as per limits prescribed under Section 197 read with Schedule V of the Companies Act, 2013.

4 All related party contracts / arrangements have been entered in ordinary course of business and are approved by the board of directors/ shareholders.

f) In view of the Management, equity Investment in Synchron Research Services Pvt Ltd will not result the investee company becoming a related party since there is no control / influence over operations:

14 OPERATING LEASE (LESSEE)

a) The Company has obtained certain equipments under non-cancellable lease agreements for the period of 36 months which are subject to renewal at mutual consent.

The expenses charged to the statement of profit & loss in current year are Rs.9.66 Lakhs (P.Y. Rs.21.17 Lakhs)

b) The Company has taken flats / office premises and vehicles on cancellable operating leases. There are no restrictions imposed by lease arrangements. There are no sub-leases. The deposit amount are refundable on completion / cancellation of lease term. The aggregate lease rentals payable, are charged as lease rent (Refer Note No.32) in the statement of profit and loss.

15 DISCONTINUED OPERATION

a) During the year, based on the approval obtained from the Shareholders, the Company has transferred its business of manufacture, sale, marketing and distribution of domestic formulations in India and Nepal (“Identified Business”) by way of slump sale on going concern basis to Torrent Pharmaceuticals Limited (“Torrent”). Identified Business includes portfolio of several brands in India and Nepal, manufacturing facility at Sikkim and employees performing work in relation to said business.

b) Financial performance and cashflow information

Determination of fair values:

The following are the basis of assumptions used to estimate the fair value of financial assets and liabilities that are measured at fair value on recurring basis:

Investment in mutual funds:

The fair values represent net asset value as stated by the issuers of these mutual fund units in the published statements. Net asset values represent the price at which the issuer will issue further units in the mutual fund and the price at which issuers will redeem such units from the investors.

Equity investments :

Equity investments traded in an active market determined by reference to their quoted market prices. Other equity investments where quoted prices are not available, fair values are determined by reference to the expected discounted cash flows from the underlying net assets or current market value of net assets.

Derivative instruments :

For forward contracts and cross currency interest rate swaps, future cash flows are estimated based on forward exchange rates and forward interest rates (from observable forward exchange rates / yield curves at the end of the reporting period) and contract forward exchange rates and forward interest rates, discounted at a rate that reflects the credit risk of respective counterparties.

16 FINANCIAL RISK MANAGEMENT

The Company’s activities are exposed to variety of financial risks. These risks include market risk (including foreign exchange risk and interest rate risks), credit risks and liquidity risk. The Company’s overall risk management program seeks to minimize potential adverse effects on the financial performance of the Company through established policies and processes which are laid down to ascertain the extent of risks, setting appropriate limits, controls, continuous monitoring and its compliance.

Market risk:

Market risk refers to the possibility that changes in the market rates may have impact on the Company’s profits or the value of its holding of financial instruments. The Company is exposed to market risks on account of foreign exchange rates, interest rates and underlying equity prices.

Foreign currency exchange rate risk:

The Company’s foreign currency risk arises from its foreign operations, investments in foreign subsidiaries and foreign currency transactions. The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company.

Since a major part of the Company’s revenue is in foreign currency and major part of the costs are in Indian Rupees, any movement in currency rates would have impact on the Company’s performance. Consequently, the overall objective of the foreign currency risk management is to minimize the short term currency impact on its revenue and cash-flow in order to improve the predictability of the financial performance.

The major foreign currency exposures for the Company are denominated in USD & EURO. Additionally, there are transactions which are entered into in other currencies and are not significant in relation to the total volume of the foreign currency exposures. The Company hedges all trade receivables upto a maximum of 6 months forward based on historical trends. Hedge effectiveness is assessed on a regular basis.

Interest Rate Risk:

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates and where the borrowings are measured at fair value through profit or loss. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments or borrowings will fluctuate because of fluctuations in the interest rates.

Exposure to interest rate risk.

The Company adopts a policy of ensuring that maximum of its interest rate risk exposure is at a fixed rate and there are no financial instruments with floating interest rates.

Credit risk:

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Financial instruments that are subject to concentrations of credit risk materially consists of trade receivables, investments and derivative financial instruments.

All trade receivables are subject to credit risk exposure. The Company’s exposure to credit risk is influenced mainly by the individual characteristics 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 established policies, controls relating to credit approvals and procedures for continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables (other than from subsidiaries) and unbilled revenues. The Company does not have significant concentration of credit risk related to trade receivables. No single third party customer contributes to more than 10% of outstanding accounts receivable (excluding outstanding from subsidiaries) as of 31 st March 2018 and 31 st March 2017.

The Company limits its exposure to credit risk by generally investing in liquid securities having and only with counterparties that have a good credit rating. The company does not expect any losses from non- performance by these counter-parties, and does not have any significant concentration of exposures to specific industry sectors.Refer note no. 11 for movement in expected credit loss allowance.

Liquidity risk:

Liquidity risk refers to the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company generates cash flows from operations to meet its financial obligations, maintains adequate liquid assets in the form of cash & cash equivalents and has undrawn short term line of credits from banks to ensure necessary liquidity.

Capital Management

Equity share capital and other equity (other than ESOP Reserve and Other comprehensive income) are considered for the purpose of Company’s capital management. There are no externally imposed capital requirements on the Company. The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Company monitors the return on capital as well as the level of dividends on its equity shares. The Company’s objective when managing capital is to maintain an optimal structure so as to maximize shareholder value.

The Company is predominantly equity financed. Further, the company’s current assets has always been higher than the liabilities. Also current assets includes cash and bank balances along with investment which is predominantly investment in liquid and short term mutual funds being far in excess of borrowings/ debt.

No changes were made in the objectives, policies or processes for managing capital during the year ended 31 st March, 2018 and 31st March, 2017.


Mar 31, 2017

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

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

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

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

Rights, preferences and restrictions attached to Equity Shares.

The Company has one class of equity shares having a par value of Rs.2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

As per the records of the company, including its register of shareholders / members & other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

(For Shares reserved for issue under ESOS, refer note 51)

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

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

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

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

* includes Rs.109.19 lacs (Previous Years ending - 31.03.2016 Rs.116.69 lacs and 31.03.2015 Rs.91.97 lacs) paid under protest/deposit pending adjudication under Income tax Act ,1961 and Central Excise Act, 1944.

(iv) Claims made by the employees whose services have been terminated are not acknowledged as debts, the exact liability, whereof is not ascertainable.

1. On 9th July, 2014, the European Commission decided to impose an unjustified fine of € 13.97 million, jointly and severally on the Company and its subsidiary Niche Generics Ltd contending that they had acted in breach of EU competition law as Niche Generics Ltd had, in early 2005 (when the Company was only a part owner and financial investor in Niche) had agreed to settle a financially crippling patent litigation with Laboratories Servier. The Company vehemently denies any wrongdoing on the part of either itself or Niche. Both the Company & Niche have submitted appeal in September 2014 to the EU General Court seeking appropriate relief in the matter.

2. Estimated amount of Contracts remaining to be executed (Net of Advances) on Capital & other account not provided for Rs.19,908.77 lacs (Previous year ending as on 31.03.2016 is Rs.18,253.29 lacs and ending as on 31.03.2015 Rs.13,747.56 lacs).

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

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

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

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

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

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

4 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made. The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

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

6. Exceptional Items

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

7. The company uses forward contracts to hedge its risk associated with foreign currency fluctuations relating to firm commitments and forecasted transactions. The company does not enter into forward exchange contracts which are intended for speculative purpose.

The following are the outstanding forward contracts :

8. Employee Benefits

Defined benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on retirement / resignation or retirement under VRS at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

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

The Company has a defined benefit obligation for Leave encashment which is partly funded. Generally the leave encashment is paid to employees in case of resignation, retirement under VRS or retirement except in some case the same is paid annually .

* As per actuary certificate

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The discounting rate is based on material yield on government bonds having currency and terms consistent with the currency and terms of post-employment benefit obligations. The overall expected rate of return on assets is based on the LIC structure of interest rates on gratuity funds.

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

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

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

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

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

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

Note:

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

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

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


Mar 31, 2016

1. On 9th July, 2014, the European Commission decided to impose an unjustified fine of € 13.97 million, jointly and severally on the Company and its subsidiary Niche Generics Ltd contending that they had acted in breach of EU competition law as Niche Generics Ltd had, in early 2005 (when the Company was only a part owner and financial investor in Niche) had agreed to settle a financially crippling patent litigation with Laboratories Servier. The Company vehemently denies any wrongdoing on the part of either itself or Niche. Both the Company & Niche have submitted appeal in September 2014 to the EU General Court seeking appropriate relief in the matter.

2. Estimated amount of Contracts remaining to be executed (Net of Advances) on Capital & other account not provided for Rs. 18,253.29 lacs (Previous year Rs. 13,747.56 lacs).

3. (a) Cash credit, Rs. 790.15 lacs (Previous Year Rs. NIL) from Bank of India and Bank of Baroda are secured against hypothecation of Inventories, Book debts and an equitable mortgage of immovable properties located at Jogeshwari, Roha, Ghaziabad on a second, subject and subservient pari passu charge basis (First charge holder being fully satisfied and paid.)

In addition the cash credit facilities are also secured by an equitable mortgage of the Company''s immovable properties situated at Goa and Baddi on a second, subject and subservient basis. (First charge holder being fully satisfied and paid)

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

4. There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

5. The company has reviewed the investments in wholly owned subsidiaries. In respect of its investment in Unichem Farmaceutica Do Brazil Ltda, Brazil, the provision for diminution of this investment forthe year has been increased to Rs. 2,277.63 compared to Rs. 434.55 lacs made for the previous year. This has resulted in the aggregate provision for diminution to Rs. 3,581.41 lacs (previous year: 1,303.77lacs)onatotalinvestmentof Rs.5,695.88lacs (previous year Rs. 5,116.27 lacs). This provision for diminution for the current year is increased after an internal assessment based on circumstances prevailing as at the balance sheet date, such as past performance, results, assets, expected cashflows, projections, status of product approvals, nature of the market and regulatory conditions. The said increase in diminution and the total diminution is considered adequate as at the balance sheet date.

6. Employee Benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on retirement / resignation or retirement under VRS at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The Company has a defined benefit obligation for Leave encashment which is partly funded . Generally the leave encashment is paid to employees in case of resignation , retirement under VRS or retirement except in some case the same is paid annually.

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

7. Operating lease:

Premises and certain vehicles are obtained on operating lease and are renewable and non-cancellable. There are no restrictions imposed by lease arrangements. The lease term is based on individual agreements. There are no sub-leases.

The aggregate lease rentals payable, are charged as rent ( Refer Note no. 27 & 28 ) in the Statement of Profit & Loss.

8. Information pursuant to the provisions of Schedule III to the Companies Act, 2013 as certified by management.


Mar 31, 2015

Rights, preferences and restrictions attached to Equity Shares.

The Company has one class of equity shares having a par value of Rs. 2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

As per the records of the Company, including its register of shareholders / members & other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

( For Shares reserved for issue under ESOS, refer note 43)

2 Contingent Liabilities : (Rs. in lacs) 2014-15 2013-14

(i) Claims not acknowledged as debts* 1,832.22 1,568.58

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

-Subsidiaries 2,352.75 2,509.50

(iii) Other money for which the company is Contingently liable 224.84 374.44

Total 4,409.81 4,452.52

* includes Rs. 91.97 lacs (Previous Year Rs. 179.32 lacs) paid under protest/deposit pending adjudication under Income tax Act, 1961 and Central Excise Act 1944.

(iv) Claims made by the employees whose services have been terminated are not acknowledged as debts, the exact liability, whereof is not ascertainable.

3 On 9th July, 2014, the European Commission decided to impose an unjustified fine of € 13.97 million, jointly and severally on the Company and its subsidiary Niche Generics Ltd contending that they had acted in breach of EU competition law as Niche Generics Ltd had, in early 2005 (when the Company was only a part owner and financial investor in Niche) had agreed to settle a financially crippling patent litigation with Laboratories Servier. The Company vehemently denies any wrongdoing on the part of either itself or Niche. Both the Company & Niche have submitted appeal in September 2014 to the EU General Court seeking appropriate relief in the matter.

4 Estimated amount of Contracts remaining to be executed (Net of Advances) on Capital & other account not provided forRs.13,747.56 lacs (Previous year Rs.11,735.38 lacs).

5 (a) Cash credit, Rs. NIL lacs (Previous Year Rs. 62.58 lacs) from Bank of India and Bank of Baroda are secured against hypothecation of Inventories, Book debts and an equitable mortgage of immovable properties located at Jogeshwari, Roha, Ghaziabad on a second, subject and subservient pari passu charge basis ( First charge holder being fully satisfied and paid.) In addition the cash credit facilities are also secured by an equitable mortgage of the Company''s immovable properties situated at Goa and Baddi on a second , subject and subservient basis. (First charge holder being fully satisfied and paid) (b)Loan from Biotechnology Industry Research Assistance Council is secured against hypothecation of movable properties including any and all equipment, apparatus machineries, machineries spares, tools and other accessories, goods and / or other moveable property , present & future, situated at Bio technology R&D Centre, Goa.

6 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

7 On internal assessment of long term strategic investments made by the company in its wholly owned subsidiaries, considering their performance, future expectations, cash flow generated and % the synergies in the operations from the said subsidiaries over the period of investments, the management has determined an amount of Rs. 434.55 lacs as diminution for the year (previous Year Rs 176.20 lacs) taking the accumulated provision to Rs. 1,303.77 lacs ( previous year : Rs. 869.22 lacs) on total investment made of Rs. 11,327.58 lacs (Investments before diminution & excluding preference shares held in subsidiaries ) and same is considered adequate by the management as at the balance sheet date.

8 Employee Benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on retirement / resignation or retirement under VRS at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy. The Company has a defined benefit obligation for Leave encashment which is partly funded. Generally the leave encashment is paid to employees in case of resignation, retirement under VRS or retirement except in some case the same is paid annually.

* As per Actuary Certificate

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority promotion and other relevant factors, such as supply and demand in the employment market. The discounting rate is based on material yield on government bonds having currency and terms consistent with the currency and terms of post-employment benefit obligations. The overall expected rate of return on assets is based on the LIC structure of interest rates on gratuity funds.

9 Operating lease:

Premises and certain vehicles are obtained on operating lease and are renewable and non-cancellable. There are no restrictions imposed by lease arrangements. The lease term is based on individual agreements. There are no sub-leases. The aggregate lease rentals payable, are charged as rent ( Refer Note no. 27 & 28 ) in the Statement of Profit & Loss.


Mar 31, 2013

1. Scheme of Amalgamation

The Hon''ble High Court of Mumbai, on July 12, 2012 sanctioned the scheme of amalgamation under Section 391 to 394 of the Companies Act,1956 of five Investment Companies (the primary assets of which comprise of equity shares in the Company) namely AVM Capital Services Private Limited (ACSPL), Chevy Capital Services Private Limited (CCSPL) , PM Capital Services Private Limited (PCSPL), Pranit Trading Private Limited (PTPL), Viramrut Trading Private Limited (VTPL), (collectively herein after referred to as ''Transferor Companies'') with the Company. The Scheme was earlier approved by the shareholders in the court-convened meeting held on November 3, 2011. The Company filed the Court Order with the Registrar of Companies on 6th August, 2012 to make the scheme effective in terms of said order dated 12th July 2012. ULL has given effect for the said Scheme in its books of accounts with effect from the appointed date i.e. 1st April 2011. In accordance with the Scheme, the Company has accounted for the Amalgamation based on the "Pooling of Interest" method as under:

(i) all assets and liabilities appearing in the books of accounts of Transferor Companies have been transferred to & vested in and have been recorded by the Company at their respective book values

(ii) the investments in equity share capital of the Company as it appeared in the books of account of the Transferor Companies is cancelled

(iii) the excess of net assets value of the Transferor Companies as reduced by the face value of shares issued by the Company, adjusted for cancellation of equity share capital as mentioned above and net of all expenses in relation to the Scheme, amounting to Rs. 1.62 lacs has been credited to Surplus in the Profit and Loss Account

(iv) all inter-company transactions have been eliminated on incorporation of the accounts of Transferor Companies in the books of Company

(v) in consideration of the above, the Company issued and allotted equity shares, credited as fully paid up, to the extent indicated below, to all the members of the Transferor Companies in the following proportion:

(a) 46,72,552 fully paid up equity shares of Rs. 2 each of the Company for every 1,000 paid up equity shares of Rs. 100 each held in ACSPL

(b) 78,43,811 fully paid up equity shares of Rs. 2 each of the Company for every 1,000 paid up equity shares of Rs. 100 each held in CCSPL

(c) 46,70,186 fully paid up equity shares of Rs. 2 each of the Company for every 1,000 paid up equity shares of Rs. 100 each held in PCSPL

(d) 1,09,36,087 fully paid up equity shares of Rs. 2 each of the Company for every 1,000 paid up equity shares of Rs. 100 each held in PTPL

(e) 17,13,547 fully paid up equity shares of Rs. 2 each of the Company for every 1,000 paid up equity shares of Rs. 100 each held in VTPL

Accordingly, 2,82,93,991 fully paid up equity shares of Rs. 2 each of the Company were issued to the shareholders of the Transferor Companies, which is equivalent to the shares cancelled, vide (ii) above; these shares, aggregating to Rs. 565.88 lacs, pending allotment were shown as "Share Capital pending allotment" under Share Capital, thus resulting in no change in the total issued & paid up Share Capital of the Company. The new equity shares issued as above rank pari-passu with the existing equity shares of the Company. As per the scheme of amalgamation, the said shares were issued & allotted to the shareholders of the transferor companies as per register of members of the transferor companies as on the effective date i.e. 6 th August, 2012.

2 During the previous year ended 31st March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company, for preparation and presentation of its financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also re-classified the previous year figures in accordance with the figures of the current year.

3 Contingent Liabilities :

(Rs. in lacs)

2012-13 2011-12

(i) Claims not acknowledged as debts*. 1,790.99 1,416.00

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

- Subsidiaries 2,102.10 2,397.15

(iii) Other money for which the company is Contingently liable 495.91 518.93

Total 4,389.00 4,332.08

* includes Rs. 96.44 lacs (Previous Year Rs. 88.20 lacs) paid under protest/deposit pending adjudication under Income tax Act,1961 and Central Excise Act 1944.

(iv) Claims made by the employees whose services have been terminated are not acknowledged as debts, the exact liability, whereof is not ascertainable.

4 Estimated amount of Contracts remaining to be executed (Net of Advances) on Capital & other account not provided for Rs. 9,124.58 lacs (Previous year Rs. 11,647.05 lacs).

5 Cash credit, Rs. 572.05 lacs (Previous Year Rs. 949.14 lacs) from Bank of India and Bank of Baroda are secured against hypothecation of Inventories, Book debts and mortgage of immovable properties located at Jogeshwari, Roha, Ghaziabad on first pari passu charge & on immovable properties at Goa and Baddi Unit I on a second and subservient charge.

Short Term unsecured borrowings Rs. Nil (Previous Year Rs. 1,538.15 lacs) represent Packing / Buyers credit in Foreign currency availed from various banks against export receivables. Maximum tenor of such borrowings is 6 months from the date of availment.

6 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

7 On internal assessment of long term investments made by the Company in its subsidiaries during the year, the management has determined an amount of Rs. 159.81 lacs (previous year Rs. 142.55 lacs) for diminution, which has been provided in the accounts.

8 Shareholders of the Company approved the sale of company''s unit at SEZ, Indore, Madhya Pradesh through a postal ballot. The results of the said ballot were announced on 29.03.2013. Majority of fixed assets in this unit are included under the head " Capital work in progress" (Refer Note no. 13)

The sale will be completed after receipt of certain necessary approvals.

9 The Company uses forward contracts to hedge its risk associated with foreign currency fluctuations relating to firm commitments and forecasted transactions. The Company does not enter into forward exchange contracts which are intended for speculative purpose.

10 Employee Benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on retirement / resignation or retirement under VRS at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The Company has a defined benefit obligation for Leave encashment which is partly funded. Generally the leave encashment is paid to employees in case of resignation, retirement under VRS or retirement except in some case the same is paid annually.

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

11 Operating lease:

Premises and certain vehicles are obtained on operating lease and are renewable/cancellable at mutual consent. There are no restrictions imposed by lease arrangements. The lease term is based on individual agreements. There are no sub-leases. The aggregate lease rentals payable, are charged as rent (Refer Note no. 28 ) in the Statement of Profit & Loss.

12 The amount of Dividends proposed to be distributed to Equity shareholders for the FY. 2012-2013 includes dividend on shares allotted to employees as per ESOP Scheme of the company, after the Balance sheet but before record date, on which dividend is declared in Board Meeting. The total 13,750 nos. of shares are allotted after balance sheet date on which dividend of Rs. 4.50/- per share is declared and will be paid after approval of same in ensuing Annual General Meeting. Accordingly provision has been made for dividend distribution tax (DDT) on such dividend in F.Y. 2012-2013 Audited accounts.


Mar 31, 2012

1. Scheme of Amalgamation

The Hon'ble High Court of Mumbai, on July 12, 2012 sanctioned the scheme of amalgamation under Section 391 to 394 of the Companies Act,1956 of five Investment Companies (the primary assets of which comprise of equity shares in the Company) namely, AVM Capital Service Private Limited (ACSPL), Chevy Capital Service Private Limited (CCSPL), PM Capital Service Private Limited (PCSPL), Pranit Trading Private Limited (PTPL), Viramrut Trading Private Limited (VTPL), (collectively herein after referred to as ‘Transferor Companies') with the Company. The Scheme was earlier approved by the shareholders in the court-convened meeting held on November 3, 2011. The Company has filed the Court Order with the Registrar of Companies on 6th August, 2012 to make the scheme effective in terms of said order dated 12th July 2012. ULL has given effect for the said Scheme in its books of accounts with effect from the appointed date i.e. 1st April 2011. In accordance with the Scheme, the Company has accounted for the Amalgamation based on the "Pooling of Interest" method as under: (i) all assets and liabilities appearing in the books of accounts of Transferor Companies have been transferred to & vested in and have been recorded by the Company at their respective book values.

(ii) the investments in equity share capital of the Company as it appears in the books of account of the Transferor Companies have been cancelled.

(iii) the excess of net assets value of the Transferor Companies as reduced by the face value of shares issued by the Company, adjusted for cancellation of equity share capital as mentioned above and net of all expenses in relation to the Scheme, amounting to Rs. 1.62 lacs has been credited to Surplus in the Profit and Loss Account.

(iv) all inter-company transactions have been eliminated on incorporation of the accounts of Transferor Companies in the books of Company.

(v) in consideration of the above, the Company shall issue and allot equity shares, credited as fully paid up, to the extent indicated below, to all the members of the Transferor Companies in the following proportion:

(a) 46,72,552 fully paid up equity shares of Rs. 2 each of the Company for every 1,000 paid up equity shares ofRs. 100 each held in ACSPL

(b) 78,43,811 fully paid up equity shares of Rs. 2 each of the Company for every 1,000 paid up equity shares ofRs. 100 each held in CCSPL

(c) 46,70,186 fully paid up equity shares of Rs. 2 each of the Company for every 1,000 paid up equity shares ofRs. 100 each held in PCSPL

(d) 1,09,36,087 fully paid up equity shares of Rs. 2 each of the Company for every 1,000 paid up equity shares ofRs. 100 each held in PTPL

(e) 17,13,547 fully paid up equity shares of Rs. 2 each of the Company for every 1,000 paid up equity shares ofRs. 100 each held in VTPL

Accordingly, 2,82,93,991 fully paid up equity shares of Rs. 2 each of the Company will be issued to the shareholders of the Transferor Companies, which is equivalent to the shares cancelled, vide (ii) above; these shares, aggregating to Rs. 565.88 lacs, pending allotment have been shown as "Share Capital pending allotment" under Share Capital, thus resulting in no change in the total issued & paid up Share Capital of the Company. The new equity shares to be issued as above shall rank pari-passu with the existing equity shares of the Company. As per the scheme of amalgamation, the said shares will be issued & allotted to the shareholders of the transferor companies as per register of members of the transferor companies as on the effective date i.e. 6th August, 2012.

Rights, preferences and restrictions attached to Equity Shares.

The company has one class of equity shares having a par value of Rs. 2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

2 During the year ended 31st March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of its financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The company has also re-classified the previous year figures in accordance with the figures of the current year.

3 Contingent Liabilities :

(Rs. in lacs)

2011-12 2010-11

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

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

- Subsidiaries 2,397.15 2,535.60

- Others 223.76 218.06

(iii) Letters of Credit 676.82 518.44

Total 4,713.73 3,956.13

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

(iv) Claims made by the employees whose services have been terminated are not acknowledged as debts, the exact liability, whereof is not ascertainable.

4 Estimated amount of Contracts remaining to be executed (Net of Advances) on Capital & other account not provided forRs. 11,647.05 lacs (Previous yearRs.8,208.84 lacs).

5 Cash credit and Packing credit ofRs. 949.14 lacs (Previous yearRs. 847.27 lacs) from Bank of India and Bank of Baroda are secured against hypothecation of Inventories, Book debts and mortgage of immovable properties located at Jogeshwari, Roha, Ghaziabad on first pari passu charge & on immovable properties at Goa and Baddi Unit I on a second and subservient charge.

Short Term unsecured borrowings represent Packing / Buyers credit in Foreign currency availed from various banks against Export receivables and Import Letter of Credit. Maximum tenor of such borrowings is 6 months from the date of availment.

6 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

7 On internal assessment of long term investments made by the company in its subsidiaries during the year, the management has determined an amount of Rs. 142.55 lacs (previous Year Rs. 125.66 lacs) for diminution, which has been provided in the accounts.

8 The company uses forward contracts to hedge its risk associated with foreign currency fluctuations relating to firm commitments and forecasted transactions. The company does not enter into forward exchange contracts which are intended for speculative purpose.

9 Employee Benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The Company has a defined benefit unfunded obligation for Leave encashment. Generally the leave encashment is paid to employees in case of retirement ,resignation or retirement under VRS except in some case the same is paid annually.

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

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The discounting rate is based on material yield on government bonds having currency and terms consistent with the currency and terms of post-employment benefit obligations. The overall expected rate of return on assets is based on the LIC structure of interest rates on gratuity funds.

10 Related Party Disclosures

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

1 Relationships

(i) Subsidiaries of the Company:

Niche Generics Limited

Unichem SA Pty Ltd.

Unichem Farmaceutica Do

Brasil Ltda

Unichem Pharmaceuticals

(USA) Inc

Unichem Laboratories Limited,

Ireland

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

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

(iii) Key Management personnel and their relatives:

Dr. Prakash A. Mody

(Chairman and Managing Director)

Mrs. Anita Mody

Ms. Supriya Mody

Ms. Suparna Mody

Ms Shwetambari Mody

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

11 Operating lease:

Premises and certain vehicles are obtained on operating lease and are renewable/cancellable at mutual consent. There are no restrictions imposed by lease arrangements. The lease term is based on individual agreements. There are no sub-leases. The aggregate lease rentals payable, are charged as rent (Refer Note No.28) in the Statement of Profit & Loss.

12 The amount of Dividends proposed to be distributed to Equity shareholders for the F.Y. 2011-2012 includes dividend on shares alloted to employees as per ESOP Scheme of the company ,after the Balance sheet but before record date, on which dividend is declared in Board Meeting. The total 126,625 nos. of shares are alloted after balance sheet date on which dividend of Rs. 3/- per share is declared and will be paid after approval of same in ensuing Annual General Meeting of Shareholders. Accordingly provision has been made for dividend distribution tax (DDT) on such dividend in F.Y. 2011-2012 Audited accounts.

13 Interim Dividend for the previous year included an amount of Rs. 2,524.82 lacs @ Rs. 7/- per share (face value of Rs. 5/- per share) declared on 10th May, 2010 and paid on 21st May, 2010. Accordingly said amount along with Dividend Distribution Tax of Rs. 419.34 lacs was shown under "Short term Provisions" in previous year.


Mar 31, 2010

1 Previous years figures have been regrouped, recast and restated wherever necessary.

2 Contingent Liabilities : (Rs. in lacs)

Current Year Previous Year

(i) Claims not acknowledged as debts*. 582.05 599.78

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

- Subsidiaries 1,214.20 1,352.60

- Others 169.67 185.33

(iii) Letters of Credit 140.75 441.70

Total 2,106.67 2,579.41

* includes Rs. 91.27 lacs (Previous Year Rs. 91.27 lacs) paid under protest/deposit pending adjudication. (iv) Claims made by the employees whose services have been terminated are not acknowledged as debts, the exact liability, whereof is not ascertainable.

2 Estimated amount of Commitments (Net of Advances) on Capital Account, not provided for Rs. 2,075.84 lacs (Previous year Rs. 1,225.96 lacs)

3 (i) External commercial borrowings (ECB) of Rs. Nil (Previous year? Nil) from Co-operative Centrale Raiffeisen

Boerenleenbank B.A., Singapore was secured by first pari-passu charge on Companys immovable properties at Goa and at Baddi Unit I. Company has filled necessary forms with ROC for satisfaction of charges. However related title deeds are pending collection. (ii) Cash credit, Packing credit and Demand loans of? 248.08 lacs (Previous year? 674.78 lacs) from Bank of India and Bank of Baroda are secured against hypothecation of Inventories, Book debts and mortgage of immovable properties located at Jogeshwari, Roha, Ghaziabad on first pari passu charge and on immovable properties at Baddi Unit I and Goa on a second and subservient charge.

4 There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made. The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

5 On internal assessment of long term investments made by the Company in its subsidiaries during the year, the management has determined an amount of? 72.00 lacs (Previous Year? 193.00 lacs) for diminution, which has been provided in the accounts.

6 Addition to Fixed Assets and Capital Work in Progress other than Land includes Rs. 202.82 lacs (Previous year Rs. 382.07 lacs) being expenditure of capital nature on Research & Developments.

7 Establishment & Administrative expenses include political contribution Rs. Nil (Previous Year Rs. 60.00 lacs to Nationalist Congress Party).

8 Debtors are secured to the extent of Initial Advance of Rs. 2,048.35 lacs (Previous Year Rs. 1,878.41 lacs) received from Distributors and Consignment Agents

9 The Company uses forward contracts to hedge its risk associated with foreign currency fluctuations relating to firm commitments and forecasted transactions. The Company does not enter into forward exchange contracts which are intended for speculative purposes.

10 Employee Benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The Company has a defined benefit unfunded obligation for leave encashment . Generally the leave encashment is paid to employees in case of retirement , resignation or retirement under except in some case the same is paid annually .

The following tables summarise the components of net benefit expense recognised in the Profit and Loss Account and the funded status and amounts recognised in the Balance Sheet for gratuity benefits.

11 Operating lease:

Premises and certain vehicles are obtained on operating lease and are renewable/cancellable at mutual consent. There are no restrictions imposed by lease arrangements. The lease term is based on individual agreements. There are no sub- leases. The aggregate lease rentals payable, are charged as rent (Refer Schedule 15) in the Profit & Loss Account.

12 The deferred tax liability for the current year amounting to Rs. 232.00 lacs (Previous year Rs. 10.00 lacs) & Excess / short provision for taxation of previous years accounted during the current year Rs. 32.63 lacs (Previous year Rs. 13.81 lacs) is shown in the Profit and Loss Account under Provision for Taxation.

13 Interim Dividend includes an amount of Rs. 2,524.82 lacs @ Rs. 7/- per share (face value of Rs. 5/- per share ) declared on 10th May, 2010 and paid on 21st May, 2010. Accordingly said amount along with Dividend Distribution Tax of Rs. 419.34 lacs is shown under Schedule-12 as provisions.

Information pursuant to the provisions of paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956 as certified by management.

14 Statement of Installed Capacities (as Certified by the Management) and Actual Production during the year.

a) Production Includes the Companys Products manufactured by others on Loan License basis, but does not include products manufactured by the Company on behalf of others*.

b) The capacity mentioned above is annual capacity based on maximum utilisation of plant and machinery based on existing product mix. Installed capacity may vary due to change in product mix.

c) Installed capacity as certified by management being a technical matter is relied upon by the auditors.

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