2.14 Provisions, Contingent Liabilities and Contingent
Assets
a. Provisions
Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to
settle the obligation and a reliable estimate can be
made of the amount of the obligation. The expense
relating to a provision is recognised in the statement
of profit and loss or balance sheet as the case may be.
b. Contingent Liabilities
Contingent liability is disclosed for (i) Possible
obligations which will be confirmed only by the future
events not wholly within the control of the Company or
(ii) Present obligations arising from past events where
it is not probable that an outflow of resources will be
required to settle the obligation or a reliable estimate
of the amount of the obligation cannot be made.
c. Contingent Assets
Contingent Assets are not recognised in the financial
statements. Contingent Assets if any, are disclosed in
the notes to the financial statements.
2.15 Earnings per share
Basic earnings per equity share are computed by dividing
the net profit attributable to the equity holders of the
Company by the weighted average number of equity shares
outstanding during the period. Diluted earnings per equity
share is computed by dividing the net profit attributable to
the equity holders of the Company by the weighted average
number of equity shares considered for deriving basic
earnings per equity share and also the weighted average
number of equity shares that could have been issued upon
conversion of all dilutive potential equity shares. The dilutive
potential equity shares are adjusted for the proceeds
receivable had the equity shares been actually issued at
fair value (i.e. the average market value of the outstanding
equity shares). Dilutive potential equity shares are deemed
converted as of the beginning of the period, unless issued at
a later date. Dilutive potential equity shares are determined
independently for each period presented.
The number of equity shares and potentially dilutive equity
shares are adjusted retrospectively for all periods presented
for any share splits and bonus shares issues including for
changes effected prior to the approval of the financial
statements by the Board of Directors.
2.16 Segment Reporting:
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker of
the Company is responsible for allocating resources and
assessing performance of the operating segments.
2.17 Government Grant
Government grants are recognised when there is reasonable
assurance that the grant will be received and the Company
will comply with conditions attached to the grant.
Accordingly, Government grants is deducted to calculate
the carrying amount of the asset, and is recognised in profit
or loss over the life of a depreciable asset as a reduced
depreciation expense. Government grant related to specific
expenses are shown as other income in the Statement of
Profit and Loss. Government grant relating to income is
recognised in the statement of profit and loss and presented
with other operating income.
2.18 Recent Accounting Pronouncements
Ministry of Corporate Affairs ("MCA") notifies new standards
or amendments to the existing standards under Companies
(Indian Accounting Standards) Rules as issued from time to
time. For the year ended March 31, 2025, MCA has notified
Ind AS - 117 "Insurance Contracts" and amendments to Ind
AS 116 - "Leases", relating to sale and leaseback transactions,
applicable w.e.f. April 1, 2024. The Company has reviewed
the new pronouncements and based on its evaluation
has determined that the Company has not entered into
transactions covered under Ind 117 & amedments to Ind
AS 116 and therefore, there is no impact on the financial
statements'.
The rights, preferences and restrictions including restrictions on the distribution of dividends and the repayment of
capital
The Company is having only one class of shares i.e. Equity carrying a nominal value of H2/- per share. Every holder of the equity
share of the Company is entitled to one vote per share held. In the event of liquidation of the Company, the equity shareholders
will be entitled to receive remaining assets of the Company after the distribution / repayment of all creditors. The distribution to
the equity shareholders will be in proportion of the number of shares held by each shareholder.
The Company declares and pays dividend on the equity shares in Indian Rupees. Dividend proposed by the Board of Directors is
subject to approval of the shareholders at the ensuing Annual General Meeting, except in case of interim dividend.
Exceptional items pertaining to previous year include the write-off of identified CWIP H473.56 crores for the year ended March 31,
2024, against the provision of impairment already created in March 2023. There is no impact on current or previous period's profit.
B Sikkim Insurance claim
The Company's formulation manufacturing operations in Sikkim were disrupted by flash floods on October 4, 2023, got fully
resumed in February, 2024. The insurance company has approved total final claim of H83.61 Crores on reinstatement value of
Property, Plant & Equipment and loss of profit due to business interruption. The claims inter alia include H5.92 Crores for damages
to Property, Plant and Equipment, H34.72 Crores for lost inventories and H30.10 Crores for restoration and other expenditures.
The company has received full approved insurance claim. As a result of above, net income of H12.87 Crores has been recognised
under Exceptional Items in the Statement of Profit and Loss for the year ended March 31,2025.
A description of methods used for sensitivity analysis and its limitations:
Sensitivity analysis is performed by varying single parameter while keeping all the other parameters unchanged.
Sensitivity analysis fails to focus on the interrelationship between underlying parameters. Hence, the results may vary if two
or more variables are changed simultaneously. The method used does not indicate anything about the likelihood of change
in any parameter and the extent of the change, if any.
Major risk to the plan
A. Actuarial Risk: It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:
Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an
increase in Obligation at a rate that is higher than expected. Variability in mortality rates: If actual mortality rates are higher
than assumed mortality rate assumption then the Gratuity Benefits will be paid earlier than expected. Since there is no
condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending
on the relative values of the assumed salary growth and discount rate. Variability in withdrawal rates: If actual withdrawal
rates are higher than assumed withdrawal rate assumption then the Gratuity Benefits will be paid earlier than expected.
The impact of this will depend on whether the benefits are vested as at the resignation date.
B. Investment Risk: For funded plans that rely on insurers for managing the assets, the value of assets certified by the
insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is
independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if
there are significant changes in the discount rate during the inter-valuation period.
C. Liquidity Risk: Employees with high salaries and long durations or those higher in hierarchy, accumulate significant
level of benefits. If some of such employees resign/retire from the Company there can be strain on the cash flows.
D. Market Risk: Market risk is a collective term for risks that are related to the changes and fluctuations of the financial
markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time
value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice
versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability
is exposed to fluctuations in the yields as at the valuation date.
E. Legislative Risk: Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change
in the legislation/regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to
pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and
the same will have to be recognized immediately in the year when any such amendment is effective.
6. Provident Fund
The Company is liable for any shortfall, as per terms of the Provident Fund Trust deed, in the fund assets based on the Government
specified rate of return. Such shortfall, if any, is recognised in the Statement of Profit and Loss as an expense in the year of incurring
the same, no such shortfall during the year & in previous year. Contribution to Provident fund trust and ESIC H40.74 Crores (PY H36.99
Crores).
15. Financial Risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk
- Liquidity risk and
- Market risk
i) 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 Company's receivables from customers, Deposit, Cash and cash
equivalents and other receivables.
Trade receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer, demographics
of the customer, default risk of the industry and country in which the customer operates. 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 has used expected credit loss model for assessing the
impairment loss.
Cash and cash equivalents
As at the year end, the Company held cash and cash equivalents of H14.23 Crores (PY H20.13 Crores). The cash and cash
equivalents, other bank balances are held with banks having good credit rating.
Loan given to subsidiaries
Credit risk related to loan given to subsidiaries is not expected to be material.
Other financial assets
Other financial assets are neither past over due nor impaired.
ii) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligation as they fall due. The Company
ensures that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions.
The Company has sufficient unutilised fund and non fund based working capital credit limit duly sanctioned by various banks.
The company is rated by leading credit agency CRISIL, the rating "CRISIL A1 " and "AA /Stable" has been assigned for short
term and long term facility respectively, indicating high degree of safety regarding timely payment and servicing of financial
obligation.
iii) Market risk
Currency Risk
The Company's foreign exchange risk arises from its foreign operations, foreign currency revenues and expenses. The Company
uses foreign exchange option contracts, to mitigate the risk of changes in foreign currency exchange rates in respect of its
business transactions and recognized assets and liabilities. The Company enters into foreign currency options contracts which
are not intended for trading or speculative purposes but for mitigating currency risk.
Sensitivity analysis
For the year ended 31st March, 2025 every 5% weakening of Indian Rupee as compare to the respective major currencies for
the above mentioned financial assets/liabilities would increase Company's profit and equity by approximately H55.72 Crores
(PY H47.49 Crores). A 5% strengthening of the Indian Rupee as compare to the respective major currencies would lead to an
equal but opposite effect.
Interest rate risk and Exposure to interest rate risk
The Company has loan facilities on floating interest rate, which exposes the Company to risk of changes in interest rates.
For the year ended 31st March, 2025 every 50 basis point decrease in the floating interest rate component applicable to its
borrowings would decrease the Company's interest cost by approximately H2.46 Crores (PY H1.60 Crores) on a yearly basis.
A 50 basis point increase in floating interest rate would have led to an equal but opposite effect.
Commodity rate risk
The Company's operating activities involve purchase and sale of Active Pharmaceutical Ingredients (API), whose prices are
exposed to the risk of fluctuation over short periods of time. Commodity price risk exposure is evaluated and managed through
procurement and other related operating policies.
Other Risk
Since company has been significantly dealing in regulatory market, continuous compliance of all manufacturing facilities
is pre requisite. Any adverse action by regulatory authority of the Company's target market can adversely affect company's
operation.
16. Capital Management
The Company's capital management objectives are:
* to ensure the Company's ability to continue as a going concern and
* to provide an adequate return to shareholders through optimisation of debts and equity balance.
The Company monitors capital on the basis of the carrying amount of debt less cash and cash equivalents as presented on the face
of the financial statements. The Company's objective for capital management is to maintain an optimum overall financial structure.
23. The Company has working capital borrowing from banks on the basis of security of current assets and quarterly statements filed
by the Company with banks are in agreement with the books of account.
24. Other Statutory information
i. The company does not have any Benami property, where any proceeding has been initiated or pending against the Company
for holding any Benami property.
ii. The company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
iii. The company have not traded or invested in Crypto currency or Virtual Currency during the period/year.
iv. The company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities
(Intermediaries) with the understanding that the Intermediary shall:
a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of
the Company (Ultimate Beneficiaries) or
b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
v. The company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the
understanding (whether recorded in writing or otherwise) that the Company shall:
(a) 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
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
vi. The company has no such transaction which is not recorded in the books of account that has been surrendered or disclosed
as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other
relevant provisions of the Income Tax Act, 1961.
vii. The company holds all the title deeds of immovable properties in its name.
viii. The company is not declared as wilful defaulter by any bank or financial Institution or other lender.
25. The previous year's figures have been regrouped / rearranged wherever necessary to make them comparable with the current year.
As per our report of even date For and on behalf of the Board
For K C Mehta & Co LLP
Chartered Accountants Chirayu Amin
Firm's Registration No. 106237W/W100829 Chairman & CEO (DIN: 00242549)
Shripal Shah
Partner Ashok Kumar Barat R. K. Baheti Manisha Saraf
Membership No. 114988 Director (DIN: 00492930) Director - Finance & CFO Company Secretary
Vadodara : 6th May, 2025 (DIN: 00332079) Vadodara : 6th May, 2025
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