7) Provisions, contingent liabilities and contingent assets
Provisions
A provision is recognised if, as a result of a past event, the Company has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation. If the effect of the time value of
money is material, provisions are determined by discounting the expected future cash flows at
a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the liability. Where discounting is used, the increase in the provision due to the
passage of time is recognized as a finance cost.
Contingent liabilities
A disclosure for a contingent liability is made when there is a possible obligation or a present
obligation that may, but probably will not, require an outflow of resources. Where there is a
possible obligation or a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Contingent assets
Contingent assets are not recognised in the financial statements. However, contingent assets
are assessed continually and if it is virtually certain that an inflow of economic benefits will
arise, the asset and related income are recognised in the period in which the change occurs.
8) Revenue Recognition
Sale of goods and trade license
Revenue is recognized, when the company substantially satisfies its performance obligation
while transferring a promised good or service to its customers. The company considers the
terms of the contract and its customary business practices to determine the transaction price.
Performance obligations are satisfied at the point of time when the customer obtains controls
of the asset. Revenue is measured based on transaction price, which is the fair value of the
consideration received or receivable, stated net of discounts, returns and value added tax.
Transaction price is recognised based on the price specified in the contract, net of the
estimated sales incentives/ discounts. Accumulated experience is used to estimate and
provide for the discounts/ right of return, using the expected value method.
Other Income
Interest Income
Interest Income mainly comprises of interest on Margin money deposit with banks relating to bank
guarantee. Interest income should be recorded using the effective interest rate (EIR). However, the
amount of margin money deposits relating to bank guarantee are purely current in nature, hence
effective interest rate has not been applied. Interest is recognized using the time-proportion
method, based on rates implicit in the transactions.
9) Borrowing Costs
Borrowing costs consist of interest, ancillary and other costs that the Company incurs in
connection with the borrowing of funds and interest relating to other financial liabilities.
Borrowing costs also include exchange differences to the extent regarded as an adjustment to
the borrowing costs. Borrowing costs directly attributable to the acquisition, construction or
production of an asset that necessarily takes a substantial period of time to get ready for its
intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs
are expensed in the period in which they occur.
10) Tax Expenses
Tax expense consists of current and deferred tax.
Income Tax
Income tax expense is recognized in the statement of profit and loss except to the extent that it
relates to items recognized directly in equity, in which case it is recognized in equity. Current
tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of
previous years.
Deferred Tax
Deferred tax is recognised using the balance sheet method, providing for temporary
differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax
rates that are expected to be applied to the temporary differences when they reverse, based on
the laws that have been enacted or substantively enacted by the reporting date. Deferred tax
assets and liabilities are offset if there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to income taxes levied by the same tax authority on the
same taxable entity, or on different tax entities, but they intend to settle current tax liabilities
and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A
deferred tax asset is recognized to the extent that it is probable that future taxable profits will be
available against which the temporary difference can be utilized. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable that
the related tax benefit will be realized.
Dividend distribution tax Tax on Dividends declared by the Company are recognised as an
appropriation of Profit.
Dividend Distribution Tax is not applicable from April 1,2020.
11) Earnings Per Share
The Company presents basic and diluted earnings per share (“EPS”) data for its ordinary
shares. Basic earnings per share are computed by dividing the net profit after tax by the
weighted average number of equity shares outstanding during the period. Diluted earnings per
share is computed by dividing the profit after tax by the weighted average number of equity
shares considered for deriving basic earnings per share and also the weighted average
number of equity shares that could have been issued upon conversion of all dilutive potential
equity shares.
12) Trade receivables
Trade receivables are initially recognized at fair value and subsequently measured at
amortized cost using effective interest method, less provision for impairment.
13) Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to
the end of the financial year which are unpaid. The amounts are unsecured and are presented
as current liabilities unless payment is not due within twelve months after the reporting period.
They are recognized initially at fair value and subsequently measured at amortized cost using
the effective interest method.
Determination of fair values
The Company's accounting policies and disclosures require the determination of fair value, for
certain financial and non-financial assets and liabilities. Fair values have been determined for
measurement and/or disclosure purposes based on the following methods. When applicable,
further information about the assumptions made in determining fair values is disclosed in the
notes specific to that asset or liability. A fair value measurement of a non-financial asset takes
into account a market participant's ability to generate economic benefits by using the asset in
its highest and best use or by selling it to another market participant that would use the asset in
its highest and best use.
(i) Property, plant and equipment
Property, plant and equipment, if acquired in a business combination or through an exchange
of non-monetary assets, is measured at fair value on the acquisition date. For this purpose, fair
value is based on appraised market values and replacement cost.
(ii) Intangible assets
The fair value of brands, technology related intangibles, and patents and trademarks acquired
in a business combination is based on the discounted estimated royalty payments that have
been avoided as a result of these brands, technology related intangibles, patents or
trademarks being owned (the “relief of royalty method”). The fair value of customer related,
product related and other intangibles acquired in a business combination has been
determined using the multi-period excess earnings method after deduction of a fair return on
other assets that are part of creating the related cash flows.
(iii) Inventories
The fair value of inventories acquired in a business combination is determined based on its
estimated selling price in the ordinary course of business less the estimated costs of
completion and sale, and a reasonable profit margin based on the effort required to complete
and sell the inventories.
(iv) Investments in equity and debt securities and units of mutual funds
The fair value of marketable equity and debt securities is determined by reference to their
quoted market price at the reporting date. For debt securities where quoted market prices are
not available, fair value is determined using pricing techniques such as discounted cash flow
analysis. In respect of investments 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. Accordingly, such net asset values are
analogous to fair market value with respect to these investments, as transactions of these
mutual funds are carried out at such prices between investors and the issuers of these units of
mutual funds.
(v) Derivatives
The fair value of foreign exchange forward contracts is estimated by discounting the difference
between the contractual forward price and the current forward price for the residual maturity of
the contract using a risk-free interest rate (based on government bonds). The fair value of
foreign currency option and swap contracts and interest rate swap contracts is determined
based on the appropriate valuation techniques, considering the terms of the contract.
(vi) Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present
value of future principal and interest cash flows, discounted at the market rate of interest at the
reporting date. For finance leases the market rate of interest is determined by reference to
similar lease agreements. In respect of the Company's borrowings that have floating rates of
interest, their fair value approximates carrying value.
35. CONTINGENT LIABILITIES:
Estimated amount of contracts remaining to be executed on Capital Accounts and not
provided for - NIL.
Other Contingent Liabilities:
1. GST demands for the financial years 2017-18, 2018-19, 2019-20 and 2020-21 proposed
through show cause notices and demands raised for which either appeals has been filed or yet
to be filed: Rs. 2,432.00 Lakhs.
2. TDS notices raised for the financial years 2008-09 to 2023-24: Rs. 1.88 Lakhs.
39. SEGMENT REPORTING:
The Company's Directors examines the Company's performance from a product perspective
and has indentified two reportable segments:
(a) Manufacture: This division involves in manufacturing of Pharmaceuticals, Medical
Formulations.
(b) Trading: This division involves in trading of Pharmaceuticals, Medical Formulations.
Segment revenues and expenses:
The Company has an established basis of allocating purchases to the segments, which is
reasonable and followed consistently. All other Expenses / Income are not specifically
allocable to specific segments and accordingly these expenses are disclosed as unallocated
expenses or income and adjusted only against the total income of the Company.
Segment Assets and Liabilities:
The Company has not segregated segment wise assets and liabilities as there are no segment
wise assets or liabilities except Debtors and Creditors.
Inter segment transfers:
The Company has no inter-segment transfers.
Summary of Segment Information:
40. In the opinion of the Board the Current assets, Loans and advances are approximately of the
value stated if realized in the ordinary course of the business. The provision for depreciation
and all known liabilities are adequate and not in excess of the amount considered reasonably
necessary.
41. The Company is yet to file Satisfaction of Charges to an extent of Rs. 57.20 Lakhs.
42. Confirmation of balances has not been received from any of the Creditors, Debtors and for
Loans & Advances, which are subject to reconciliation. Provision for doubtful debts, if any, in
respect of the above and the consequential adjustment, if any, whether of revenue nature or
otherwise, will be dealt accordingly.
43. ADDITIONAL INFORMATION PURSUANT TO PARAGRAPHS 3 & 4 OF PART II OF
SCHEDULE III TO THE COMPANIES ACT 2013, (AS CERTIFIED BY A DIRECTOR): NIL.
44. DISCLOSURE UNDER MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT
ACT, 2006:
As regards to the compliance of provisions relating to the dues to Micro, Small and Medium
Enterprises in terms of Section 22 of the Micro, Small and Medium Enterprises Development
Act, 2006, the Company has sent letters to the Creditors to confirm whether they are Micro,
Small and Medium Enterprises. The Company is yet to receive the confirmations from them.
Hence, the Company could not quantify the dues, if any to the Micro, Small and Medium
Enterprises.
46. SHARE CAPITAL:
The paid up capital of the company as on 31st March 2024 is Rs. 8,13,13,920/- divided into
81,31,392 equity share of Rs. 10/- each.
47. Despite the net worth of the Company being eroded more than fifty percent and cash losses for
the year under review the accounts were prepared under going concern basis.
48. The financial Statements approved on 30.05.2024 were presented in a different pattern, hence
the board has decided to revise the financial statements to make them compliant of Schedule -
III of Companies Act 2013. There is no change in profit or loss of the Company due to this
revision of financial statements. The revision to the financial statements have been carried out
solely for the presentation of financial statements as per Schedule III of Companies Act 2013
and no additional adjustments have been carried out for any other events occurring after
30.05.2024 (being the date when the financial statements were first approved by the Board of
Directors of the Company).
49. During the year the manufacturing license of the Company has been cancelled by the
concerned regulatory authorities due to the non compliance of provisions of Schedule - M of
Drugs & Cosmetics Act 1940 & rules made thereunder vide Proc. Rc. No. 1741/DD-
NZB/Mfg/2023 dated 03.07.2023. In this scenario the Company has ventured in to trading of
same products instead of upgrading the machinery and continuing the manufacturing. Hence
the Company has sold its entire Property, Plant & Equipment except vehicles and has
disposed off all the obsolete and expired inventories of the Company which were maintained
for the purpose of manufacturing activity and repaid its external debts.
50. The cash balance as on 31.03.2024 amounts to Rs.29.42 Lakhs which given the nature of the
business of the company is relatively on higher side. Since we could not undertake physical
verification of cash on 31.03.2024, we have relied upon the certificate issued by the
management in this regard.
51. The Company has used accounting software for maintaining its books of account for the
financial year ended March 31,2024 but the same does not have a feature of recording audit
trail (edit log) facility and the same has operated throughout the year for all relevant
transactions recorded in the software. As the audit trail feature is not adopted in the first place,
tampering it with or preserving it by the company as per the statutory requirements for record
retention does not arise.
52. All the amounts are rounded off to the nearest lakhs.
53. Previous year figures have been regrouped and restructured wherever necessary.
As per our revised report of even date annexed. For and on behalf of the Board
For MATHESH & RAMANA
CHARTERED ACCOUNTANTS Sd/-
S. Murali Krishna Murthy
Sd/- Managing Director
B. V. RAMANA REDDY DIN: 00540632
Partner
M No: 026967
UDIN:24026967BKBPAQ4276 Sd/-
S. Srinivas Kumar
Place: Hyderabad Whole Time Director & CFO
Date: 13.08.2024 DIN: 02010272
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