s. Provisions, contingent liabilities and contingent assets
Provisions are recognised when present obligations as a result of past events will probably lead to an outflow of economic
resources from the Company and they can be estimated reliably. Timing or amount of the outflow may still be uncertain. A
present obligation arises from the presence of a legal or constructive obligation that has resulted from past events.
Provisions are measured at the best estimate of expenditure required to settle the present obligation at the reporting date,
based on the most reliable evidence, including the risks and uncertainties associated with the present obligation.
In those cases where the possible outflow of economic resource as a result of present obligations is considered improbable or
remote, or the amount to be provided for cannot be measured reliably, no liability is recognised in the balance sheet.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be
confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of
the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources
will be required to settle the obligation or a reliable estimate of the amount cannot be made. The Company does recognise a
contingent liability but discloses its existence in the financial statements.
Any amount that the Company can be virtually certain to collect from a third party with respect to the obligation is recognised
as a separate asset up to the amount of the related provisions. All provisions are reviewed at each reporting date and adjusted
to reflect the current best estimate.
Contingent assets are not recognized in the financial statements.
t. Exceptional Items
An item of income or expense which by its size, type or incidence requires disclosure in order to improve an understanding of
the performance of the Company is treated as an exceptional item and the same is disclosed in standalone statement of profit
and loss and in the notes forming part of the standalone financial statements.
1.4 Critical management judgments in applying accounting policies and estimation uncertainty
The preparation of the Company's financial statements requires management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and liabilities and the related disclosures.
Judgments
Research and developments costs : Management monitors progress of internal research and development projects by using
a project management system. Significant judgment is required in distinguishing research from the development phase.
Development costs are recognised as an asset when all the criteria are met, whereas research costs are expensed as incurred.
Management also monitors whether the recognition requirements for development costs continue to be met. This is necessary
due to inherent uncertainty in the economic success of any product development.
Recognition of deferred tax assets : The extent to which deferred tax assets can be recognized is based on an assessment of the
probability of the future taxable income against which the deferred tax assets can be utilised.
Provisions, contingent liabilities and contingent assets : The Company is the subject of legal proceedings and tax issues covering
a range of matters, which are pending in various jurisdictions. In view of the uncertainty inherent in such matters, it is difficult to
predict the final outcome of such matters. The cases and claims against the Company often raise difficult and complex factual and
legal issues, which are subject to many uncertainties, including but not limited to the facts and circumstances of each particular
case and claim, the jurisdiction and the differences in applicable law. In the normal course of business, management consults
with legal counsel and certain other experts on matters related to litigation and taxes. The Company accrues a liability when it is
determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated.
Impairment of financial assets : At each balance sheet date, based on historical default rates observed over expected life, the
management assesses the expected credit loss on outstanding financial assets.
Evaluation of indicators for impairment of assets : The evaluation of applicability of indicators of impairment of assets requires
assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Estimates
Useful lives of depreciable / amortisable assets : Management reviews its estimate of the useful lives of depreciable / amortisable
assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and
economic obsolescence that may change the utility of certain software, IT equipment and other plant and equipment.
Defined benefit obligation : Management's estimate of the Defined Benefit Obligations (DBO) is based on a number of critical
underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases.
Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Fair value measurements
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are
not available). This involves developing estimates and assumptions consistent with how market participants would price the
instrument.
1.5 New and amended standards
The Company has applied the following amendments for the first time for their annual reporting period commencing 1 April 2023:
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors : The amendments to Ind AS 8 clarify the distinction
between changes in accounting estimates, changes in accounting policies and the correction of errors. They also clarify how
entities use measurement techniques and inputs to develop accounting estimates. The amendments had no impact on the
Company's standalone financial statements.
Ind AS 1- Presentation of Financial Statements : The amendments to Ind AS 1 provide guidance on applying materiality judgements
to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful
by replacing the requirement for entities to disclose their 'significant' accounting policies with a requirement to disclose their
'material' accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about
accounting policy disclosures.
The amendments have had an impact on the Company's disclosures of accounting policies, but not on the measurement,
recognition or presentation of any items in the Company's financial statements.
Ind AS 12 - Income Taxes : The amendments to Ind AS 12 Income Tax narrow the scope of the initial recognition exception, so that
it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases. The above
amendments did not have any material impact on the amounts recognised in prior periods and are not expected to significantly
affect the current or future periods.
1.6 Recent accounting pronouncements (Standard issued but not yet effective):
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 31st March, 2025, MCA has notified Ind AS - 117
Insurance Contracts and amendments to Ind AS 116 - Leases, relating to sale and leaseback transactions, applicable to the
Company w.e.f. 1st April, 2024. The Company has reviewed the new pronouncements and based on its evaluation, has determined
that it does not have any significant impact in its Standalone financial statements.
Ind AS 21 The Effects of Changes in Foreign Exchange Rates to specify how an entity should assess whether a currency is
exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. The amendments also require
disclosure of information to enable understand the impact on the entity's financial performance, financial position and cash flows.
The amendments are effective for annual reporting periods beginning on or after April 01,2025. When applying the amendments,
an entity cannot restate comparative information. The Company has reviewed the new pronouncements and based on its
evaluation has determined that it does not have any significant impact on its financial statements.
There are no new and amended standards that are issued, but not yet effective as of 31st March, 2025.
Notes :
(i) Refer note 37(B) for information on contractual commitments related to property, plant and equipment.
(ii) During financial year ended March 31, 2024, the Company has classified its properties amounting ?167.12 million (Gross value ?172.60 million and accumulated
depreciation ?5.48 million) as investment property from property plant and equipment, due to change in plan and objective towards utilisation of said
properties.
(iii) During financial year ended March 31, 2025, the Company has classified its properties amounting ?35.00 million (Gross value ?40.80 million and accumulated
depreciation ?5.80 million) as investment property from property plant and equipment, due to change in plan and objective towards utilisation of said
properties.
(iv) The Company carried out an impairment assessment of the aforesaid cash-generating unit (CGUs) in terms of Ind AS 36 "imparement of assets" using a
discounted cash flow model which is based on the net present value of the forecasted earnings of the CGUs with the help of an external valuation specialist. This
is calculated using certain assumptions viz. discount rate of 17.8%, terminal year growth rate of 4% and cash flow forecasts for 5 years. The Company has also
involved independent, registered valuer to assess the value in use of the CGUs by cash flow approach. These forecasts contain management's best view of the
expected performance of the CGU based on the management's knowledge of the market environment, strategic initiatives and future business plans. As per the
management's assessment, there is no impairment required to be recognized in the statement of profit and loss account.
(v) The Company has not revalued its property, plant and equipment during the financial year 2024-25.
(vi) The Company has adopted cost model for its property, plant & equipments.
(b) Terms / rights attached to equity shares:
The Company has only one class of equity shares having a par value of ? 1 per share. Each holder of equity shares is entitled to one vote per
share. The Company declares and pays dividends in Indian Rupees. The dividend, if any, proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting. The Board of Directors has not proposed any dividend on equity shares
for current year and previous year.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after
distribution of all preferential amounts including preference shares. The distribution will be in proportion to the number of equity shares held
by the equity shareholders.
The Company has not reserved any shares for issuance under options.
Nature and purpose of other reserves:
General reserve: The Company has transferred a portion of the net profit before declaring dividend to general reserve pursuant to the provisions
of the erstwhile Companies Act, 1956. Mandatory transfer to general reserve is not required under the Act.
Securities premium reserve : Represents premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Act.
Retained earnings: Profits / (losses) that the Company has earned till date, less any transfer to any reserves, dividend or other distribution paid to
shareholders.
Capital redemption reserve: Created in accordance with provisions of the Act in connection with the buy back of equity shares from the market.
Capital reserve: Created pursuant to the transfer of pharmaceutical business to PBPL and demerger of the real estate business.
Notes :
i) Includes income tax demand of ?162.22 million in respect to Assessment Year 2005-06. The Income Tax Department had issued alleged
demand based on certain grounds related to purchases made by the Company from an overseas vendor. The matter was decided in favour of
the Company and the demand was cancelled by Commissioner of Income Tax (Appeals) ("CIT (Appeals)"). However, the Income Tax Department
has filed an appeal before Income Tax Appellate Tribunal ('ITAT') against the order of CIT (Appeals) which is pending at present. The Company
believes that it has merit in this case, hence no provision is required.
ii) A search operation was conducted by the Income Tax Department in the premises of the Company in January 2012 and hence the Company
had re-filed the income tax returns for the Assessment Year 2006-07 to 2012-13. During the year ended March 31, 2015, the Income Tax
Department completed the assessment of the said years, disallowed certain expenses and issued demand of ?3,294.90 million (including
interest) on various grounds. The Company preferred appeals before the CIT (Appeals) against the orders of the Income Tax Department. The
appeals were decided in favour of the Company and the demand was cancelled. However, CIT (Appeals) has made certain disallowances with
respect to Assessment Year 2010-11 and 2011-12 against which the Company has filed appeals before the ITAT. The Income Tax Department
has also filed appeals before ITAT against the orders of CIT (Appeals). The appeals before ITAT are pending at present. Based on legal advice, the
Company believes that it has merits in these cases, hence no provision is required.
iii) The Income Tax Department had raised a demand of ?33.69 million in respect of Assessment Year 2016-17 based on transfer pricing order
passed by Dispute Resolution Panel. The alleged demand was raised on purchase of certain goods by the Company from its associated
enterprise wherein, according to Income Tax Department, arms' length price adjustment was warranted. The company filed appeal before
Income Tax Appellate Tribunal against the order passed by the Income Tax Department. During financial year 2023-24, the said appeal had
been decided in favour of the Company. Further the department has filed an appeal before the Hon'ble High court, Delhi against the order of
the Hon'ble ITAT. Based on legal advice, the Company believes that it has merits in these cases, hence no provision is required.
iv) The Income Tax Department has levied a penalty of ?0.40 million in respect of Assessment Year 2017-18 on account of additions made in
assessment order passed for the said year. The company has filed an appeal before CIT (Appeals) against the order passed by the Income Tax
Department and the same was dismissed by the CIT (Appeals). Further the company filed an appeal before the Hon'ble ITAT against the order
passed by the CIT (Appeals). The said appeal has been decided in the favor of the company vide ITAT order dated April 29, 2025. Therefore the
penalty doesn't exist, post the effect of ITAT order. Based on legal advice, the Company believes that it has merits in these cases, hence no
provision is required.
v) The Income Tax Department had raised a demand of ?2,620.80 million in respect of Assessment Year 2020-21. The alleged demand was raised
due to wrong addition of contingent liability not provided for, set-off of business losses not allowed and increase in other income due to set-off
of business losses not allowed. The company filed an appeal before CIT (Appeals) and rectification application before assessing officer against
the order passed by the Income Tax Department. During the financial year 2023-24, while the said appeal was under consideration, in the
meantime the assessing officer has passed rectification order in favour of the Company and reduced the said tax demand to ?91.63 million. The
Company believes that it has merits in this case, hence no provision is required.
vi) In respect of Sales tax / VAT demands for Chennai, Kolkata, Patna and Pune the matter has been settled in favour of the Company. Service tax
and Excise & Custom duty litigations are pending with various authorities. The Company believes that it has merit in these cases and hence no
provision is required.
vii) The Company had manufactured and offered supply of certain vaccines which were manufactured against the confirmed order received
from the Ministry of Health and Family Welfare ("MOHFW"), Govt. of India. Some quantities of vaccines were supplied during December
2011, the balance could not be supplied in view of disputes with respect to delivery dates and in the meantime the stock of such vaccines
amounting to ?74.10 million expired. Further, the Company had also received an advance market commitment ("AMC") amounting to
?100.00 million against these vaccines. The refund of the advance so received (after adjusting the amount receivable against the vaccines
already supplied) was demanded back by MOHFW along with interest on account of non-supply of balance quantities of vaccines. In
view of above disputes, the Company obtained a stay order from the Hon'ble Delhi High Court against recovery of said amount, till the
disputes are finally resolved through arbitration. The arbitration award was pronounced in favour of the Company on March 14, 2019,
vide which MOHFW was directed to pay the applicable amount for vaccine supplied / offered for supply along with interest. MOHFW
filed an appeal before Hon'ble Delhi High Court raising certain objections against the award, which was dismissed by the Hon'ble Court.
MOHFW filed an appeal against such order before the Division Bench of the Hon'ble Delhi High Court which was also rejected. MOHFW
has filed a Special Leave Petition against such order before the Hon'ble Supreme Court of India. The same is currently pending before
the Hon'ble Supreme Court. The Company's application for execution of award is also currently pending before the Hon'ble Delhi High
Court. The Company believes that it has merits in this case and the outcome of this matter will not have any material adverse impact on
the financial position of the Company.
viii) In October 2023, the Company received notice from the International Court of Arbitration, Paris ("ICC”) intimating commencement of an
Arbitration proceeding pursuant to the request filed by Apotex Inc., claiming an amount of US$ 118.14 million towards outsized alleged losses
plus interest thereon under the Collaboration Agreement dated May 09, 2014 entered into between Apotex Inc. and the Company. The said
agreement was subsequently assigned and novated in favour of Panacea Biotec Pharma Limited ("PBPL") wholly owned subsidiary of the
Company. The Company submitted its response to the notice of arbitration rebutting the claims raised by Apotex citing novation of the said
agreement in favour of PBPL. Apotex subsequently filed request for joinder of PBPL in the said arbitration proceedings, raising the claim
against the Company and PBPL aggregating to US$ 163.24 million, which had been objected by the Company and PBPL. The management
believes that the Company and / or PBPL is not in breach of its obligations and the claims filed by Apotex are frivolous, unsubstantiated,
premised on fundamental factual misstatements and incorrect legal assumptions regarding the Collaboration Agreement and contrary to the
overwhelming facts and evidence. Both sides had appointed their respective arbitrators and these arbitrators nominated the third arbitrator as
the chairman of the arbitration tribunal.
PBPL had also filed a request for arbitration before ICC with respect to dispute with Apotex raising a claim of US$ 9.90 million towards PBPL's
share of profit from sale of authorized generic products sold by Apotex during financial year 2022-23 in USA under the terms of the said
Collaboration Agreement and the settlement agreement signed among the Parties including the innovator company. ICC had combined the
two arbitrations proceedings and thereafter the initial arbitration proceedings started.
The parties are currently in discussion for an out of court settlement, the settlement negotiations are underway. Based on the legal opinion
obtained and assessment of aforesaid matter, the management is of the view that no material liability is expected to arise on the Company and
/ or PBPL on account of aforesaid claims.
ix) In March 2024, the Company had received summons from Asst. Commissioner of State Tax, Mumbai, Maharashtra to enquire if the Company
had paid GST on sale of the leasehold land and building at Navi Mumbai to Mankind Pharma Ltd. in March 2022. The Company's officials
attended the proceedings and clarified that the GST was not applicable as the said transaction was covered under Schedule III to CGST/
MGST Act. However, following persistent follow up by the GST authorities, the Company had deposited an amount of ?31.42 million
under protest. The Company filed a writ petition before the Hon'ble High Court of Judicature at Bombay against the said proceedings.
The Hon'ble Bombay High Court has set aside the demand order on January 22, 2025 and the matter has been remanded back to the
Assistant Commissioner of State Tax, Mumbai for a fresh adjudication on the show cause notice. The Hon'ble High Court has also directed
the Assistant Commissioner of State Tax, Mumbai to take into consideration and deal with the recent decision of the Gujarat High Court on
a similar issue whilst rendering its findings on the show cause notice. The management believes that the Company has merit in its case and
the outcome of this matter will not have any material adverse impact on the financial position of the Company. Accordingly, the Company
has not made any provisions in respect of this matter.
x) The Company has received notices from various authorities seeking information mentioned in the said notices. In view of the management
these notices may not have any financial liability on the Company.
(B) Capital and other commitments
Estimated amount of contracts remaining to be executed on capital account, net of advances and not provided in the books are as follows:
38. Leases
Company as a lessee:
The Company does not have any long-term non cancellable leases during the current and previous financial year. As on April 1, 2019, leasehold
land has been transferred to Right of Use ("RoU") asset. Refer note 2.1 for details.
Lease payments with respect to short term lease amounts to ?28.76 million (March 31,2024: ?20.18 million). Refer note 34.
B.2 Financial assets and liabilities are measured at amortised cost. All the financial assets and liabilities valued at amortised cost form part of Level 3
of hierarchy table. Further, the carrying amounts of trade receivables, cash and cash equivalents, consignment debtors, interest accrued, other
receivables, other bank balances, trade payables, employee payables and other current payables are considered to be the same as fair values,
due to their short term nature. The fair value of all financial assets and financial liability, approximates the amortised cost due to their short term
nature. They are classified as level 3 fair value in the fair value hierarchy due to the inclusion of unobservable inputs, including own credit risk.
The fair value of loans to employees and security deposits approximates the carrying amount.
44. Financial risk management
Risk management framework
The Company's activities expose it to market risk, liquidity risk and credit risk. The management has the overall responsibility for the establishment
and oversight of the Company's risk management framework. This note explains the sources of risk which the entity is exposed to and how the
entity manages the risk and the related impact in the financial statements.
A. Credit risk
Credit risk is the risk that a counter party fails to discharge its obligation to the Company. The Company's exposure to credit risk is influenced
mainly by cash and cash equivalents, trade receivables and financial assets measured at amortised cost. The Company continuously monitors
defaults of customers and other counter parties and incorporates this information into its credit risk controls.
A.1 Credit risk management
The Company assesses and manages credit risk based on internal credit rating system. Internal credit rating is performed for each class of
financial instruments with different characteristics. The Company assigns the following credit ratings to each class of financial assets based on
the assumptions, inputs and factors specific to the class of financial assets:
A: Low credit risk on financial reporting date
B: Moderate credit risk
C: High credit risk
Cash and cash equivalents and bank deposits: Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting
highly rated banks and diversifying bank deposits and accounts in different banks across the country.
Trade receivables : Credit risk related to trade receivables are mitigated by taking bank guarantees / letter of credit, from customers where
credit risk is high. The Company closely monitors the credit-worthiness of the debtors through internal systems that are configured to define
credit limits of customers, thereby limiting the credit risk to pre-calculated amounts. The Company assesses increase in credit risk on an
ongoing basis for amounts receivable that become past due and default is considered to have occurred when amounts receivable become
two year past due.
Other financial assets measured at amortised cost: Other financial assets measured at amortized cost includes, security deposits and others.
Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously.
A.2 Expected credit losses for financial assets other than trade receivables
The Company provides for expected credit losses on loans and advances other than trade receivables by assessing individual financial
instruments for expectation of any credit losses. Since the Company deals with only high-rated banks and financial institutions, credit risk in
respect of cash and cash equivalents, other bank balances and bank deposits is evaluated as very low. In respect of loans, comprising of security
deposits, credit risk is considered low because the Company is in possession of the underlying asset. However, in respect of loans comprising
loans to related parties, credit risk is evaluated on the basis of credit worthiness of those parties and loss allowance is measured as lifetime
expected credit losses. In respect of other financial assets, credit risk is evaluated based on Company's knowledge of the credit worthiness
of those parties and loss allowance is measured as lifetime expected credit losses. The Company does not have any expected loss based
impairment recognised (except in case of loans to related parties) on such assets considering their low credit risk nature, though incurred loss
provisions are disclosed under each sub-category of such financial assets.
B. Liquidity risk
Liquidity risk is 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 Company's approach to managing liquidity is to ensure as far as possible, that it will
have sufficient liquidity to meet its liabilities when they are due. The Company manages its liquidity needs by carefully monitoring scheduled
debt servicing payments for long-term financial liabilities as well as cash outflows due in day-to-day business. Long-term liquidity needs for a
180-day and a 360-day lookout period are identified monthly.
Management monitors rolling forecasts of the liquidity position and cash and cash equivalents on the basis of expected cash flows. The
Company takes into account the liquidity of the market in which the entity operates.
B.1 Contractual maturities of financial liabilities
The tables below analyse the Company's financial liabilities based on their contractual maturities. The amounts disclosed in the table are the
contractual undiscounted cash flows.
C. Market risk
(i) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest
rates. The Company's exposure to the risk of changes in market interest rate related primarily to the Company's non-current and current
debt obligations financed with fixed interest rate. The Company always try to ensure minimum cash outlfows. The assumed movement
in basis points for the interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly
higher volatility. Accordingly, the Company is not exposed to fluctuations in interest rate risk on borrowings.
(ii) Foreign currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the United State
Dollar (USD), Euro, Swiss Frank (CHF), Pound Sterling (GBP), Swedish Krona (SEK) and Singapore Dollar (SGD). Foreign exchange risk arises
from recognised assets and liabilities denominated in a currency that is not the functional currency of the Company. The Company does
not use any derivative instruments to manage its exposure. Also, the Company does not use forward contracts and swaps for speculative
purposes.
45. Capital management policies
The Company's capital management objectives are to ensure the Company's ability to continue as a going concern as well as to provide an
adequate return to shareholders by pricing products and services commensurately with the level of risk.
The Company monitors capital on the basis of the carrying amount of equity plus its subordinated loan, less cash and cash equivalents as presented
on the face of the statement of financial position recognised in other comprehensive income.
The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics
of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders,
return capital to shareholders or issue new shares. The Company is not subject to any externally imposed capital requirements. The amounts
managed as capital by the Company are summarised as follows:
47. The Board of Directors of the Company and Panacea Biotec Pharma Limited ("PBPL") had in their respective meetings held on February 01,
2022, approved sale of PBPL's pharmaceutical formulations brands in India and Nepal including related trademarks, copyrights etc., including
identified employees to Mankind Pharma Limited (the "Buyer”) for a consideration of ?18,720.00 million plus applicable taxes. The said
transaction was approved by the shareholders of PBPL and the Company in their respective meetings held on February 23, 2022 and February
26, 2022 respectively. Subsequently, the Company and PBPL signed the definitive agreements including the asset purchase agreement with the
Buyer on February 28, 2022. Out of the total consideration, PBPL has recognised revenue of ?359.94 million (March 31, 2024: ?360.34 million)
which is shown as an "Exceptional Item” in the Statement of Profit and Loss of PBPL and Consolidated Statement of Profit and Loss of the Group.
The remaining consideration of ?210.05 million (March 31,2024: ?570.99 million) would be recognised as revenue in subsequent years and is
shown as Contract Liability in the financial statements of PBPL and consolidated financial statements of the Group.
48. For the financial year ended March 31,2025, the Company has incurred loss (before tax and exceptional items) of ?260.58 million (year ended
March 31,2024: profit of ?42.06 million). The Company has already taken various measures aimed at improving the financial condition of the
Company, inter-alia, sale of pharmaceutical brands, which enabled the Group to repay its outstanding dues of Non-Convertible Debenture
(NCDs) and retain sufficient surplus to fund its existing projects and operations and also help the Group to enter new markets, expediting
development of new products and expanding capacities for production of drug substance. The surplus funds with the Group has also
strengthened the working capital position and has helped / will help scaling up its pharmaceutical formulations business in international
markets including United States of America, European Union and in Rest of the World etc. and to pursue other business opportunities. The
Company has already received higher long-term awards from United Nations Children's Fund (UNICEF) and Pan American Health Organisation
for supply of pentavalent vaccine and awards from UNICEF for supply of bivalent oral polio vaccine. Based on these measures and continuous
efforts to improve the business performance, the management has prepared the financial statements on going concern basis.
49. (a) In view of the Company's decision to make the structure of overseas subsidiaries more efficient and aligned to business objectives and to
save management and administrative expenses thereof, the Company has decided to wind up Panacea Biotec (International) SA ("PBS”) in
due course. Accordingly, the Company has created 'Provision for impairment on its investment in PBS. Owing to accumulated losses in PBS
and its wholly-owned subsidiary, Panacea Biotec Germany GmbH (PBGG), the Company has continued to maintain the provision for bad and
doubtful advances in respect of the loans receivable and accrued interest from PBS and PBGG amounting to ?139.00 million and ?458.90
million, respectively, as on March 31,2025 (March 31, 2024: ?123.48 million and ?407.67 million, respectively).
(b) The Company has applied with the authorized dealer to seek permission from Reserve Bank of India for writing off an amount of ?585.16
million which was receivable from the Company's wholly owned subsidiary Rees Investments Ltd. ("Rees"), which was compulsory liquidated
and dissolved by the authorities of Guernsey on May 23, 2019. Pending such approval, the Company is continuing to maintain the provision for
bad and doubtful advances of ?585.16 million (March 31, 2024: ?585.16 million) in respect of the loan and accrued interest receivable from Rees.
50. Under the collaboration with the Human Vaccine Limited Liability Company, Russia ("HV”), an indirect wholly-owned subsidiary of Joint Stock
Company "Management Company of Russian Direct Investment Fund” for manufacture of Covid-19 vaccine using the technology to be provided
by HV, the Company had received from HV an advance amount of US$ 7.00 million in November 2020, out of which ~US$ 6.58 million was used
to meet the expenses relating to Sputnik-V and Sputnik Light vaccine project. The Company believes that due to the failure on the part of HV to
demonstrate & transfer the technology and certain other reasons beyond the Company's control, the complex process of technology transfer
and manufacture of Sputnik-V vaccine could not be completed successfully and the Technology Transfer Agreement dated October 22, 2020
entered into between HV and the Company ("TTA”) for manufacturing of Covid-19 vaccine stood frustrated and accordingly both the parties stood
automatically discharged from their obligations by operation of law. The Company has already incurred huge expenses on the said project and is
thus entitled to adjust the same against the advance received from HV. The Company has already conveyed its position to HV and has offered to
refund the balance amount of US$ 0.42 million and provided relevant details / documents pertaining to the said expenses. On July 1, 2024, the
Company received a copy of Request for Arbitration filed by HV with London Court of International Arbitration ("LCIA”) for initiating arbitration
alleging that the Company has been in alleged breach of its obligations under the TTA and is thus liable to refund the advance payment of US$7.00
million plus interest thereon as may be awarded over the course of arbitration. Both parties have now appointed the sole arbitrator in this matter.
On March 31, 2025, the Arbitrator issued draft Procedural Order (PO) and Procedural Timetables (PT) which is under finalization. Based on the
Company's assessment, duly supported by legal advice, the Company believes that it will not be liable to pay back the amount adjusted towards
wasted expenses and costs under dispute with HV and the outcome of this arbitration proceeding is not reasonably expected to have any material
financial impact on the Company. The Company is taking requisite steps to safeguard its interest and is in the process of filing its response to the
said notice. The Company has received legal advice from its counsel and believes that it will not be liable to pay back the amount adjusted towards
expenses under dispute with HV.
51. In August 2021, the Company had entered into a Licensing and Manufacture Agreement with HV, Generium JSC and Dr. Reddy's Laboratories
Limited ("DRL"). As per the terms of the agreement, the Company was to undertake fill-and-finish activities of Sputnik-V vaccine using the
ready-to-fill drug substance supplied by Generium and supply the Sputnik-V vaccine so produced to DRL. Pursuant to the said agreement, the
Company received drug substance from Generium and produced ~1.96 million doses of Sputnik-V vaccine out of which DRL purchased ~0.86
million doses only and refused to purchase and pay for the remaining ~1.10 million doses. Because of breach of their respective obligations by
DRL and Generium, the pending payment of ~US$ 7.41 million for the drug substance received from Generium could not be made. After several
rounds of discussion among the parties to settle the dispute amicably, Generium has filed notice of arbitration with Singapore International
Arbitration Centre (SIAC) for arbitration of dispute with respect to the said pending payment and interest thereon totalling ~US$ 8.90 million.
Panacea Biotec has also initiated a parallel arbitration proceeding regarding its claims against DRL, Generium and Human Vaccine and filed
notice of arbitration with SIAC during the financial year. At the Company's request, SIAC has clubbed both the arbitration proceedings together.
The parties have appointed sole arbitrator. All the parties involved in the Arbitration have filed claims and counter claims against each other. The
witness statements and cross examination have been completed and further arbitration proceedings, including filing of closing submissions
etc. is in progress. The Company has obtained legal opinion from its legal counsel who, considering the current stage of the proceedings, have
opined that (a) the Company has a reasonable defence against the claims brought by Generium, DRL and HV; and (b) the possibility of any such
claim falling to the Company may be classified as low at this stage.
52. Additional regulatory information required by Schedule III under Companies Act 2013:
(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 transactions with stuck off companies.
(iii) The Company does not have any charges or satisfaction of charge which is yet to be registered with Registrar of Companies beyond the
statutory period.
(iv) The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned to, or invested funds in, any other person(s) or entity(ies), including foreign entities (Intermediaries)
with the understanding that the Intermediary shall:
- directly or indirectly lend to, or invest in, other persons or entities identified in any manner whatsoever by or on behalf of the Company
(Ultimate Beneficiaries); or
- provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(vi) The Company has not received any funds from any other person(s) or entity(ies), including foreign entities (Funding Party) with the
understanding (whether recorded in writing or otherwise) that the Company shall:
- directly or indirectly lend to, or invest in, other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party or
- provide any guarantee, security or the like to or on behalf of the Funding Party.
(vii) The Company has not entered into any transaction which is not recorded into 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 (such as, search or survey or any other relevant provisions
of the Income Tax Act, 1961).
(viii) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.
(ix) The Company has complied with the number of layers prescribed under Section 2(87) of the Act read with the Companies (Restriction on
Number of Layers) Rules, 2017.
(x) No scheme of arrangements has been approved by the Competent Authority in term of sections 230 to 237 of the Companies Act, 2013,
during the year.
Notes:
a) In respect of aforesaid mentioned ratios, there is no significant change (25% or more) in financial year 2024-25 in comparison to financial year 2023-24.
b) Due to increase in borrowings raised for capital expenditure and working capital.
c) Due to decrease in earning for debt service and increase in debt service amount.
d) Due to loss during the year.
e) Due to increase in average inventory holding during the year.
f) Due to increase in average trade receivable during the year.
g) Due to loss during the year.
h) Due to loss during the year.
54. The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies
(Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies, which uses accounting software for
maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction,
creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit
trail cannot be disabled.
Management has implemented the audit trail (edit logs) at the application level in accounting software and the same was operated throughout the
year. However, the audit trail (edit logs) has not been implemented at the database level for the accounting software. The Company is evaluating
the implementation of audit trail feature for recording of edit logs at database level for the accounting software used for maintenance of books of
accounts. Further, the audit trail, to the extent maintained in the prior year, has been preserved by the Company as per the statutory requirement
for record retention.
55. In accordance with Ind AS 108, 'Operating Segments', the Company has disclosed the segment information in the consolidated financial statements.
Accordingly, the segment information is given in the audited consolidated financial statements of the Group for the year ended March 31,2025.
56. 0.00 under "? in million” represents amount less than ? 50,000 and 0.00 under units represents units less than 50,000. Further, the figures shown
in the tables may not exactly add up due to rounding off. Previous year figures have been regrouped, reclassified wherever considered necessary.
The impact of such reclassification/regrouping is not material to the financial statements.
57. There is no other subsequent events that occurred after reporting date.
The above notes form an integral part of the standalone financial statements.
As per our report of even date
For Suresh Surana & Associates LLP For and on behalf of Board of Directors of Panacea Biotec Limited
Chartered Accountants
Firm Registration No. 121750W/W100010
Sd/- Sd/- Sd/-
Kapil Kedar Dr. Rajesh Jain Sandeep Jain
Partner Chairman and Managing Director Joint Managing Director
Membership No. 094902 (DIN 00013053) (DIN 00012973)
Sd/- Sd/-
Vinod Goel Devender Gupta
Place : New Delhi Group CFO and Head Legal Chief Financial Officer &
Date : May 30, 2025 & Company Secretary Head Information Technology
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