Mar 31, 2018
1.1.1 Rights attached to equity shares
âThe Company has only one class of equity shares having a face value of Rs.2 /- each. Each holder of equity share is entitled to one vote per share.In the event of liquidation of the Company, the equity shareholders will be entitled to receive the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.â
The Company has made Company has made preferential allotment of shares during the year under review. Company has issued 20,75,906 Equity shares at Rs.24.05 per share which inclusive of face value Rs.2 per share and Security Premium of Rs.22.05 per share and 5,00,000 Equity Shares at Rs.50.00 per share which inclusive of face value Rs.2 per share and Security Premium of Rs.48.00 per share. Company has followed the procedure prescribed Under section 142 of the Act and necessary documents are filed with ROC & SEBI for the preferential allotment and hence company is in compliance with Section 62(1) (c) preferential allotment of shares, Rule 13 of Companies (Share Capital and Debentures) Rules, 2014 and Rule 14 of Companies (Prospectus and Allotment of Securities) Rules, 2014 and purpose of application of the funds so raised.
Term loan from Vijaya bank carrying floating interest rate of 11.70% repayable in twenty six equal quarterly installments at the end of each quarter commencing from 31st Nov, 2017 after a moratorium period of Six months from the date of disbursement. This loan is sucured by first charge on mortgage of Entire Plant,Equipment and other assets and further secured by entire current assets of the company along with factory land and building & Personal Guarantee of Directors.
Mortgage loan from Vijaya bank carrying floating interest rate of 11.90% repayable in One twenty equal Monthly installments Starting from the ensuring month of first drawal i.e 30.04.2017. This loan is secured by the first charge on the land and building of the factory & Personal Guarantee of Directors.
Working Capital Facility and Non Fund Based Limit from Vijaya Bank is secured by way of first pari-passu charge on current assets and second pari-passu charge on fixed assets of the company & Personal Guarantee of Directors. The Working Capital is repayable on demand. The coupon rate is linked to Marginal Cost Fund based lending rates. (MCLR).
1.1 First-time adoption of Ind AS
These financial statements, for the year ended 31st March 2018, are the firstset of financial statementsthe Company has prepared in accordance with Indian Accounting Standards(IndASs). For periods up to and including the year ended 31st March 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).
The Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31st March 2018, together with the comparative period data as at and for the year ended 31st March 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Companyâs opening balance sheet was prepared as at 1st April 2016, i.e.,the Companyâs date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1st April 2016 and the financial statements as at and for the year ended 31st March 2017.
Exemptions Applied
Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:
The Company adopted not to measure any item of property, plant and equipment at its fair value at the Transition Date. Accordingly, on the transition date, the net carrying value of the property, plant and equipment and intangible assets shall be considered as deemed cost for Ind AS purposes.
Ind AS 21 âThe Effects of Changes in Foreign Exchange Ratesâ Cumulative currency translation differences for all foreign operations are deemed to be zero as at 1 April 2016.
The Company adoptedto measure investments in subsidiaries at cost i.e., carrying value of the investments on the date of transition shall be considered as deemed cost for Ind AS purposes.
Estimates
The estimates at 1st April 2016 and at 31st March 2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items where application of Indian GAAP did not require estimation:
- FVTPL- Quoted equity shares
- Impairment of financial assets based on expected credit loss model (âECL modelâ)
The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at 1st April 2016, the date of transition to Ind AS and as of 31st March 2017.
FVTPL Financial assets
Under Indian GAAP, the Company accounted for long term investments in quoted equity shares as investment measured at cost less provision for diminution other than temporary diminution in the value of investments, if any. Under IndAS, the Company has designated such investments as FVTPL investments. Ind AS requires FVTPL investments to be measured at fair value. At the date of transition to Ind AS, difference between the instruments fair value and Indian GAAP carrying amount has been recognized as a separate component of equity, in the retained earnings.
Deferred tax
Indian GAAP requires deferred tax accounting using the statement of profit and loss approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP. Trade receivables
Under Ind AS, impairment allowance has been determined based on Expected Loss model (ECL). Due to ECL model, the company impaired its trade receivable by Rs. 3.19 Lakhs on 1st April 2016 which has been eliminated against retained earnings. The company impaired its trade receivable by Rs.0.94 Lakhs on 31stMarch 2017, such increase in impairment has been recognized in the profit the loss account for the year ended 31st Match 17.
2.1 Related Parties
In accordance with the provisions of Ind AS 24 âRelated Party Disclosuresâ and the Companies Act, 2013, Companyâs Directors, members of the Companyâs Management Council and Company Secretary are considered as Key Management Personnel. List of Key Management Personnel of the Company is as below:
- Mr.Dr.DhananjayaAlli, Managing Director
- Stanley PrabhakarRedy, Director(Executive)
- N.V.Chalapathi Rao, Whole time Director
- M.H.Rao, Director (Non-Executive)
- G.Narendra, Director (Independent Non-Executive)
- Vani Vatti, Director (Independent Non-Executive)
- K.Rajendra Prasad, Nominee Director
- AnandChittajallu ,Additional Director
- UmeshVirupakahBanakar,Additional Director
- DivyaBhavaniChakravartula ,Additional Director
- Arjun Upadyay, Company Secretary
- Suneel Pachipala, Chief Financial Officer
3.1 Segment Reporting:
The Company concluded that there is only one operating segment i.e., Manufacturing of Pharmaceutical products. Hence, the same becomes the reportable segment for the Company. Accordingly, the Company has only one operating and reportable segment, the disclosure requirements specified in paragraphs 22 to 30 are not applicable. Accordingly, the Company shall present entity-wide disclosures enumerated in paragraphs 32,33 and 34 of Ind AS 108.
4.1 Employee benefits:
Gratuity benefits
In accordance with applicable laws, the Company has a defined benefit plan which provides for gratuity payments (the âGratuity Planâ) and covers certain categories of employees in India. The Gratuity Plan provides a lump sum gratuity payment to eligible employees at retirement or termination of their employment. The amount of the payment is based on the respective employeeâs last drawn salary and the years of employment with the Company. Actuarial Valuation is pending.
5.1 Income Taxes:
a. Income tax expense/ (benefit) recognized in the statement of profit and loss:
Income tax expense/ (benefit) recognized in the statement of profit and loss consists of the following:
The Companyâs average effective tax rate for the years ended March 31, 2018 and 2017 were 20.39% and 20.04% respectively.
c. Deferred tax assets & Liabilities:
The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities and a description of the items that created these differences is given below:
6.1 Investments:
Investments consist of investments in equity shares of Everest Organics Limited measured at Fair value through Profit & Loss Account.
The details of investments as of 31stMarch 2018 are as follows:
7.1 Financial Instruments:
Set out below, is a comparison by class of the carrying amounts and fair value of the financial instruments, other than those with carrying amounts that are reasonable approximations of fair values
8.1 Financial Risk Management:
The Companyâs activities expose it to a variety of financial risks, including credit risk, liquidity risk and Market risk. The Companyâs risk management assessment and policies and processes are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Companyâs activities. The Board of Directors, risk management committee and the Audit Committee is responsible for overseeing the Companyâs risk assessment and management policies and processes.
a. Credit Risk:
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companyâs receivables from customers and investment securities. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of expected losses in respect of trade and other receivables and investments.
Trade Receivables-The Companyâs 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 credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. Financial assets that are neither past due nor impaired - None of the Companyâs cash equivalents, including deposits with banks, were past due or impaired as at 31 March 2018. Of the total trade and other receivables, Rs. 0.11 lacs as at 31 March 2018 and Rs. 4.13 lacs at31stMarch 2017.
The Companyâs credit period for customers generally ranges from 60-90 days. The aging of trade receivables that are past due but not impaired is given below:
Other than trade receivables, the Company has no significant class of financial assets that is past due but not impaired.
On account of adoption of Ind AS 109, the Company uses Expected Credit Loss (ECL) model for assessing the impairment loss. For this purpose, it is weighted average of credit losses with the respective risks of default occurring as weights. The credit loss is the difference between all contractual cash flows that are due to an entity as per the contract and all the contractual cash flows that the entity expects to receive, discounted to the effective interest rate.
Reconciliation of allowance for credit losses
The details of changes in allowance for credit losses during the year ended 31 March 2018 and 31 March 2017 are as follows:
CAPITAL MANAGEMENT
The Companyâs objective for capital management is to maximize shareholder wealth, safeguard business continuity and support the growth of the Company. The Company determines the capital management requirement based on annual operating plans and long term and other strategicinvestment plans. The funding requirement is met through equity, borrowings and operating cash flows required.
The companyâs Debt Equity ratio is as follows:
Mar 31, 2016
I. Share Capital
The Company Proposed for reduction of Equity Share Capital in the EGM held on 15th November 2012.
In terms of order of High Court of Judicature at Hyderabad for the State of Telangana and Andhra Pradesh dated 20th April 2015 the share capital of the company has been reduced from 15 crores to 5 Crores. The Accumulated losses to the Tune of 10 crores have been set off against the Share Capital.
II. Secured Loans
a) Asset Backed loan from State Bank of India, SME branch Hyderabad is secured by way of registered mortgage of land & building in plot no. 10 to 14 and 16 to 20, admeasuring 21,969.23 sq.mt in Sy no.448/2,449/2, & 450/2, Gopalaipally (V), Chityal Industrial Estate Narkatpally (m), Nalgonda Dist and hypnotization of Plant & Machinery of the factory.
b) Sri Dr Dhananjaya Alli Managing Director and Sri N.V Chalapathi Rao Director have guaranteed the above loan in their personal capacities.
c) Repayment and Interest : Drop - line overdraft for a period of 96 months with a moratorium of six months i.e Rs.9.50/-lac per month for 83 months commencing from January 2016 and Rs. 11.50/- lac in 84th month i.e., 2023.
Mar 31, 2015
I. Share Capital
The Company Proposed for reduction of Equity Share Capital in the EGM
held on 15th November 2012.
In terms of the High Court of Judicature at Hyderabad for the state of
Telangana and Andhra Pradesh the share capital of the company has been
reduced from 15 crores to 5 Crores. The Accumulated losses to the Tune
of 10 crores is been set off against the Share Capital.
II. Secured Loans
a) Working Capital loan from Allahabad Bank, Himayathnagar branch
Hyderabad are secured by a first charge by way of hypothecation of all
present and future stocks, spares, book debts, work in progress,
finished goods and all other current assets of the company.
b) Working Capital loan from Allahabad Bank, Himayathnagar branch
Hyderabad are further secured by equitable mortgage on land & building
and Hypothecation of plant & Machinery on plot no. 10 to 14 and 16 to
20, admeasuring 21,969.23 sq.mt in Sy no.448/2,449/2, & 450/2,
Gopalaipally (V), Chityal Industrial Estate Narkatpally (m), Nalgonda
Dist.
c) Sri Dr Dhananjaya Alli Managing Director and Sri G.Narendra Director
have guaranteed the above loan in their personal capacities.
III. Sundry Creditors
Based on the information available with the Company, there are no
dues/Interest outstanding to Micro, Small and Medium Enterprises, as
defined under the Micro, Small and Medium Enterprises Development Act
2006, as at March 31, 2015.
iv. Deferred Tax
a. During the current year the tax effect of the timing differences
resulted in deferred tax Asset of Rs 10,51,092/ - and the same has been
shown in P&L Account and net Deferred tax liability of Rs 11,32,193/-
is shown in the Balance Sheet under schedule Deferred Tax Liability
Net.
V. Related Parties Disclosure
i) Particulars of Related Companies
Name of the Related Party
Related Companies Nature of Relation
American Generics Associate company
Vista Pharmaceutical Inc Associate Company
Key Management Personnel
Dr. Dhananjaya Alli Managing Director
Stanley Prabhakar Reddy Director (Executive)
M.H.Rao Director(Non-Excecutive)
G.Narendra Director(Independent Non-Executive)
Vani Vatti Director(Independent Non-Executive)
K.Rajendra Prasad Nominee Director- APIDC
VI.Applicability of Accounting Standard - 17
The Company has only one business segment, i.e formulations, hence
segment reporting as defined in accounting standard 17 is not
applicable.
VII. Figures have been rounded off to the nearest rupee.
VIII a. For the period ended 31 st March 2015, the Company has adopted
the Rates and Method prescribed under Schedule II of Companies Act
2013, for the calculation of depreciation. As a result depreciation is
more by Rs.25.62 lakhs and the profits of the company are less by the
aforesaid amount.
b. In respect of the assets in the opening balance as on 01.04.2014 for
which the useful life has expired as per Companies Act 2013, have been
adjusted against the opening balance of retained earnings in an amount
of Rs.2.05 lakhs.
IX. Contingent Liability : Commissioner of Income Tax III, Hyderabad
issued a demand of tax for 3,86,58,242/- for the Assessment Year
2006-07 assuming the interest waived by IDBI under One time settlement
of dues as income for the year. The company''s appeal against demand of
Rs 3,86,58,242 was decided in company''s favour by the Income tax
appellate tribunal Andhra Pradesh Hyderabad. The Income Tax department
preferred an appeal before the Andhra Pradesh high court which again
was decided in favour of the company. The dept has preferred an appeal
against the orders of the AP high court in the Supreme Court.
Mar 31, 2013
1. Previous year''s figures have been regrouped/rearranged wherever
necessary.
2. (a) Managerial
Remuneration: 2012-2013 2011-2012
NIL NIL
(b). No provision has been made for Managing Director''s remuneration
with his consent.
3. Foreign Exchange earnings through export sales received (US$
1386932) in Rs 7, 46, 89,089 (Previous year (US$ 739247) in Rs. Rs.3,
62, 23,141
4. No depreciation on Imported Plant & Machinery of Rs.294.74 lakhs
has been provided as the Machinery though installed not put to
commercial use.
5. Stores and Consumables: 1/10 of closing stock value of
Rs.1,01,709/- purchase of consumables like punches and dies, which are
used for tablet compressions are written off during the year.
6. Sundry Creditors include dues to SSI Units of Rs 29,237 outstanding
for more than 30 days as on 31.03.2013, which was paid subsequently.
7. The Company has only one business segment, i.e. formulations,
hence segment reporting as defined in Accounting Standard 17 is not
applicable.
8. Some of the trade creditors and other liabilities are yet to be
confirmed.
9. The Revised Schedule VI to the Companies Act, 1956 has become
effective from 1st April, 2011, for preparation and presentation of
financial statements. This has significantly impacted the disclosure
and presentation made in the financial statements. Accordingly the
figures for the previous year have been reclassified, wherever
necessary to conform with the current year''s classification.
10. Reduction of Share Capital
The Company Proposed for reduction of Equity Share Capital in the last
AGM, but the same could not be accounted for as the required approvals
from BSE and SEBI are awaited.
Mar 31, 2012
1. Previous year's figures have been regrouped/rearranged wherever
necessary.
2. (a) Managerial 2011-2012 2010-2011
Remuneration: NIL NIL
(b). No provision has been made for Managing Director's remuneration
with his consent.
3. Foreign Exchange earnings through export
sales received (US$739247) in.Rs.3, 62, 23,141 (Previous year (US$
1256750) inRs.5, 67, 44,609
4. No depreciation on Imported Plant & Machinery of Rs.294.74 lakhs
has been provided as the Machinery though installed not put to
commercial use.
5. Stores and Consumables: 1/10 of closing stock value of Rs.1,
01,709/- purchase of consumables like punches and dies., which are used
for tablet compressions are written off during the year. The balance
amount of Rs 1,01,706 shown under the head inventories.
6. Sundry Creditors include dues to SSI Units of Rs 1, 51,046
outstanding for more than 30 days as on 31.03.2012, which was paid
subsequently.
7. The Company has only one business segment, i.e. formulations, hence
segment reporting as defined in Accounting Standard 17 is not
applicable.
8. Some of the trade creditors and other liabilities are yet to be
confirmed.
9. The Revised Schedule VI to the Companies Act, 1956 has become
effective from 1st April, 2011, for preparation and presentation of
financial statements. This has significantly impacted the disclosure
and presentation made in the financial statements.' Accordingly the
figures for the previous year have been reclassified, wherever
necessary to conform with the current years classification.
10.1 Money received against share warrants
The company proposed to issue shares against share warrants after
complying with the statutory formalities and collected Rs.10 lacks from
the prospective share holders. However ,as the warrant holdess decided
to exercise their right for allotment of shares,the money was refunded
subsequantly in June2012.
Mar 31, 2011
1. Previous years figures have been regrouped/rearranged wherever
necessary.
2. (a) Managerial
Remuneration: 2010-2011 2009-2010
NIL NIL
(b) No provision has been made for Managing Directors remuneration
with his consent.
3. Foreign Exchange earnings through export sales received (US$
1256750) inRs.5,67,44,609 (Previousyear US$163904 in Rs.80,13,849).
4. No depreciation on Imported Plant & Machinery of Rs.294.74 lakhs
has been provided as the Machinery though installed, but not put to
commercial use.
5. Capital Work-in-progress amounting to
Rs.7,30,19,917/-capitalised during the year as the expansion project is
implemented in full during the year and commercial production started
during 2nd quarter.
6. Stores and Consumables: 1/10 of closing stock value of
Rs.1,01,709/- purchase of consumables like punches and dies, which are
used for tablet compressions are written off during the year. The
balance amount of
Rs.2,03,417 shown under the head inventories.
7. Sundry Creditors include dues to SSI Units of Rs.51,143 outstaning
for more than30 days as on 31.03.2011,which was paid subsequently.
8. The Company has only one business segment, i.e. formulations, hence
segment reporting as defined in Accounting Standard -17 is not
applicable.
9. Contingent Liabilities:
Commissioner of Income Tax III, Hyderabad issued a demand of tax for
Rs.3,86,58,242/- for the Assessment Year 2006-07 assuming the interest
waived by IDBI under One time settlement of dues as income for the
year, which will be contested in Appellate Tribunal of Income Tax
within the scheduled time.
Mar 31, 2010
1. Previous sears figures have been regrouped/rearranged wherever
necessary.
2.(a) Managerial
Remuneration: 2009-2010 2008-2009
NIL NIL
(b) No provision has been made for Managing Directors remuneration
with his consent, as the expansion project is still under
implementation.
3. Foreign Exchange earnings through export sales received ( US$
163904) inRs.80,13,849(Previous year US$ 4,17,110 in Rs. 1,82,30,522).
4. No depreciation on Imported Plant & Machinery of Rs.294.74 lakhs
has been provided as the Machinery though installed during the year,
but not put to commercial use.
5. Stores and Consumables: 1/10 of closing stock value of Rs.
1,01,709/- purchase of consumables like punches and dies, which arc
used for tablet compressions are written off during the year. The
balance amount of Rs.3,05,126 shown under the head inventories.
6. Sundry Creditors include dues to SSI Units of Rs 96,594/-
outstanding for more than 30daysason 31.03.2010, which was paid
subsequently.
7. The Company has only one business segment, i.e. formulations, hence
segment reporting as defined in Accounting Standard - 17 is not
applicable.
8. Contingent Liabilities:
The Duputy Commissioner of Income Tax has passed an order for the
Assessment Year : 2006-07 and raised a demand of Rs.3,86,58,242/-. The
Company has filed an appeal before the Commissioner of Income tax
(Appeals), Hyderabad. Though the company won the case before
Commissioner of Income Tax (Appeals), Hyderabad. The Department has
contested the order of the Commissioner (Appeals).
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