3.14 Provisions, Contingent Liabilities and Contingent Assets3.14.1 Provisions
Provisions are recognised when there is a present obligation (legal or constructive) as a result
of a past event and 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. Provisions are determined by discounting the expected future cash flows (representing
the best estimate of the expenditure required to settle the present obligation at the balance sheet
date) at a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the liability. The unwinding of the discount is recognised as finance cost.
3.14.2 Contingent Liabilities
Contingent liability is a possible obligation arising from past events and 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
but is not recognized because it is not possible that an outflow of resources embodying economic
benefit will be required to settle the obligations or reliable estimate of the amount of the obligations
cannot be made. The Company discloses the existence of contingent liabilities in Other Notes to
Financial Statements.
3.15 Intangible Assets3.15.1 Recognition and Measurement
Software that is not an integral part of related hardware is treated as an intangible asset and
is stated at cost on initial recognition and subsequently measured at cost less accumulated
amortisation and accumulated impairment loss, if any. Internally generated intangibles, including
research costs, are not capitalised and the related expenditure is recognised in the statement of
profit and loss in the period in which the expenditure is incurred. Development cost is recognised
as an asset when all the recognition criteria are met. However, intangible assets are capitalised
subject to satisfaction of basic criteria thereon, i.e., identifiability, control and future economic
benefit to flow to the concerned asset.
3.15.2 Subsequent Expenditure
Subsequent costs are included in the asset's carrying amount only when it is probable that future
economic benefits associated with the cost incurred will flow to the Company and the cost of the
item can be measured reliably. All other expenditure is recognised in the Statement of Profit &
Loss.
3.15.3 Amortization
• Intangible assets are amortised over a period of five years.
• The amortisation period and the amortisation method are reviewed at least at the end of each
financial year. If the expected useful life of the assets is significantly different from previous
estimates, the amortisation period is changed accordingly.
3.15.4 Intangible Assets under Development
Intangible Assets under development are stated at cost, which includes expenses incurred in
connection with the development of Intangible Assets in so far as such expenses relate to the
period before getting the assets ready for use.
3.16 Operating Segment
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 the performance of the operating segments
and, accordingly, is identified as the chief operating decision maker.
The Company has identified one reportable segment, "Pharmaceuticals", based on the information
reviewed by the CODM.
3.17 Standards notified but not yet effective
There are no new standards that are notified but not yet effective, up to the date of issuance of the
Company's financial statements.
3.18 New and amended standards adopted by the Company
Effective 1 April 2025, the Company has applied the following amendments to existing standards
which have been notified by the Ministry of Corporate Affairs ("MCA"). The Companies (Indian
Accounting Standards) Second Amendment Rules, 2025, on 13 August 2025 (published in the
Official Gazette on 19 August 2025), introducing key amendments to:
Ind AS 1 (Classification of liabilities as current or non-current and non-current liabilities with
covenants); Ind AS 7 and Ind AS 107 (Disclosures for supplier finance arrangements); and
Ind AS 12 (Global implementation of OCED Pillar Two model rules).
These amendments primarily relate to the classification of liabilities with covenants, additional
disclosures for supplier finance arrangements and a temporary exception for Pillar Two deferred
taxes. The adoption of these amendments did not have a material impact on the measurement of
the Company's assets or liabilities, though it resulted in enhanced disclosures and reclassifications
in the financial statements.
4 Significant Judgements and Key Sources of Estimation in Applying
Accounting Policies
Estimates and judgements are continually evaluated. They are based on historical experience
and other factors, including expectations of future events that may have a financial impact on
the Company and that are believed to be reasonable under the circumstances. Information about
Significant judgments and Key sources of estimation made in applying accounting policies that
have the most significant effects on the amounts recognised in the financial statements is included
in the following notes:
• Recognition of Deferred Tax Assets: The extent to which deferred tax assets can be recognised
is based on an assessment of the probability of the Company's future taxable income against
which the deferred tax assets can be utilised. In addition, significant judgment is required in
assessing the impact of any legal or economic limits.
• Right-of-use assets and lease liability: The Company has exercised judgement in determining
the lease term as the noncancellable term of the lease, together with the impact of options to
extend or terminate the lease if it is reasonably certain to be exercised. Where the rate implicit
in the lease is not readily available, an incremental borrowing rate is applied. This incremental
borrowing rate reflects the rate of interest that the lessee would have to pay to borrow over a
similar term, with a similar security, the funds necessary to obtain an asset of a similar nature
and value to the right-of-use asset in a similar economic environment. Determination of the
incremental borrowing rate requires estimation.
• Defined Benefit Obligation (DBO): Employee benefit obligations are measured on the basis of
actuarial assumptions, which include mortality and withdrawal rates, as well as assumptions
concerning future developments in discount rates, medical cost trends, anticipation of future
salary increases and the inflation rate. The Company considers that the assumptions used
to measure its obligations are appropriate. However, any changes in these assumptions may
have a material impact on the resulting calculations.
• Provisions and Contingencies: The assessments undertaken in recognising provisions and
contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37,
'Provisions, Contingent Liabilities and Contingent Assets'. The evaluation of the likelihood of
the contingent events is applied on the basis of best judgment by management regarding the
probability of exposure to potential loss.
• Impairment of Financial Assets: The Company reviews its carrying value of investments carried
at amortised cost annually, or more frequently when there is an indication of impairment. If the
recoverable amount is less than its carrying amount, the impairment loss is accounted for.
• Allowances for Doubtful Debts: The Company makes allowances for doubtful debts through
appropriate estimations of the irrecoverable amount through the assessment of impairment
risk. The identification of doubtful debts requires the use of judgment and estimates. Where
the expectation is different from the original estimate, such difference will impact the carrying
value of the trade and other receivables and doubtful debts expenses in the period in which
such estimate has been changed.
• Fair value measurement of financial Instruments: When the fair values of financial assets
and financial liabilities recorded in the balance sheet cannot be measured based on quoted
prices in active markets, their fair value is measured using valuation techniques, including the
Discounted Cash Flow model. The input to these models are taken from observable markets
where possible, but where this is not feasible, a degree of judgement is required in establishing
fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and
volatility.
• Sales Return: The Company accounts for sales returns accrual by recording an allowance for
sales returns concurrent with the recognition of revenue at the time of a product sale. This
allowance is based on the Company's estimate of expected sales returns. The Company deals
in various products and operates in various markets. Accordingly, the estimate of sales returns
is determined primarily by the Company's historical experience in the markets in which the
Company operates.
Nature/ Purpose of each reserve
a) Capital Reserve: During amalgamation / merger / acquisition, the excess of net assets acquired, over
the consideration paid, if any, is treated as capital reserve. The purpose of this reserve is to accommo¬
date future merger/demerger or business combination of other nature.
b) Capital Redemption Reserve: The Company has recognised Capital Redemption Reserve on redemp¬
tion of preference shares from its retained earnings. The amount in Capital Redemption Reserve is
equal to nominal amount of the preference shares redeemed. The purpose of this reserve is for issu¬
ance of bonus share as and when declared.
c) Securities Premium: The amount received in excess of face value of the equity shares is recognised
in Securities Premium . The purpose of this reserve is for issuance of bonus share as and when
declared or amortisation of preliminary expenses.
d) General Reserve: The reserve arises on transfer from retained earning / Statement of Profit & Loss.
The purpose of retention of such reserve is for identification of free reserve for use of same when
deemed necessary in ways the preview as authorised by Companies' Act/Rule including issuance of
bonus shares.
e) Retained Earning: Retained earnings generally represents the undistributed profit/ accumulated over
the years. The balance has been retained for further distribution as dividend as and when declared.
f) Other Comprehensive Income:
(i) Equity Instrument through OCI: The Company has recognised changes in the fair value of certain
investments in equity instrument (net of tax applicable thereon) in other comprehensive income
for the purpose of utilising same at the point of disposal of relevant investment as and when done at
a future date.
(ii) Remeasurement of Defined Benefit Plans : The Company has recognised remeasurement gain /
(loss) of defined benefit plans in OCI.
27 i Details of Security
Given for Loan :
Working Capital loans from State Bank of India are secured by hypothecation of Inventories,
Book Debts and first charge on part of Property ,Plant and Equipment of the company. Overdraft
from Bandhan Bank is secured by pledge of fixed deposits with Bandhan Bank. Cash Credit and
WCDL Loan from ICICI Bank secured by Fixed deposit.
272Refer note no. 47 for information on the carrying amounts of financial and non-financial assets
pledged as security for current borrowings.
273Refer note no. 63.2 for information on Borrowings in relation to quarterly returns of current
assets filed by the company with Bank that are in agreement with the Books of Accounts.
53.3 The management assessed that the fair values of cash and cash equivalents, trade receivables, trade
payables, short term borrowings, loans, security deposit and other financial asset & other financial
liabilities approximates their carrying amounts largely due to the short-term maturities of these instru¬
ments.
53.4 Fair Valuation Technique
Investments in mutual funds and bonds are measured using quoted market prices at the reporting date
multiplied by the quantity held.
The fair value of derivative financial instruments is determined based on observable market inputs
including currency spot and forward rates, yield curves, currency volatility etc. These derivatives are
estimated by using the pricing models, where the inputs to those models are based on readily observable
market parameters, contractual terms, period to maturity, maturity parameters and foreign exchange
rates. These models do not contain a high level of subjectivity as the valuation techniques used do not
require significant judgement, and inputs thereto are readily observable from market rates. The said
valuation has been carried out by the counter party with whom the contract has been entered with and
management has evaluated the credit and non-performance risks associated with the counterparties
and believes them to be insignificant and not requiring any credit adjustments.
Fair value of non-current investment in equity instrument:
The company's investment in Bharat Fritz Werner Limited and Kothari Phytochemicals & Industries
Limited worth Rs. 845.53 lakhs and Rs. 219.68 lakhs respectively were subjected to fair valuation by
external valuers for 31/03/2026 respective value working out to Rs.1329.42 lakhs and Rs.415.14 lakhs
ipso facto entailing the difference accounted for under other comprehensive income - net of deferred
tax applicable thereon.
Valuation technique adopted for both were based on discounting of future cashflow the entities are
expected to generate.
53.5 During the year ended March 31, 2026 and March 31, 2025, there were no transfers between Level 1
and Level 2 fair value measurements, and no transfer into and out of Level 3 fair value measurements.
53.6 FAIR VALUE HIERARCHY
The following are the judgements and estimates made in determining the fair values of the financial
instruments that are (a) recognized and measured at fair value and (b) measured at amortized cost and
for which fair value are disclosed in the financial statements. To provide an indication about the reliability
of the inputs used in determining fair value, the company has classified its financial instruments into the
three levels of fair value measurement as prescribed under the Ind AS 113 "Fair Value Measurement". An
explanation of each level follows underneath the tables.
53.8 Explanation to the fair value hierarchy
The Company measures financial instruments, such as, quoted investments at fair value at each reporting date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to the fair value measurement as a whole:
53.8.1 Level 1 Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.
This includes listed equity instruments, quoted bonds and mutual funds that have net
asset value as stated by the issuers in the published statements. The fair value of all
equity instruments which are traded in the stock exchanges is valued using the closing
price as at the reporting period. The mutual funds are valued using the closing NAV
53.8.2 Level 2 Level 2: The fair value of financial instruments that are not traded in an active market
is determined using valuation techniques which maximise the use of observable market
data and rely as little as possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is included in Level 2
53.8.3 Level 3 Level 3: If one or more of the significant inputs is not based on observable market data,
the instrument is included in level 3. This is the case for unlisted equity securities included
in level 3.
54 FINANCIAL RISK MANAGEMENT : OBJECTIVE AND POLICIES.
Financial management of the Company has been receiving attention of the top management of the
Company. The management considers finance as the lifeline of the business and therefore, financial
management is carried out meticulously on the basis of detailed management information systems
and reports at periodical intervals extending from daily reports to long-term plans. Importance is laid
on liquidity and working capital management with a view to reduce over-dependence on borrowings
and reduction in interest cost. Various kinds of financial risks and their mitigation plans are as follows:
54.1 Credit Risk
The credit risk is the risk of financial loss arising from counter party failing to discharge an obligation.
The credit risk is controlled by analysing credit limits and credit worthiness of customers on continuous
basis to whom the credit has been granted, obtaining necessary approvals for credit and taking security
deposits from trade channels.
a. Provision for expected credit losses
The Company measures Expected Credit Loss (ECL) for financial instruments based on historical
trend, industry practices and business environment in which the Company operates.
For financial assets, a credit loss is the present value of the difference between:
(i) the contractual cash flows that are due to an entity under the contract; and
(ii) the cash flows the entity expects to
receive.
The Company recognises in profit or loss, the amount of expected Credit Losses (or reversal) that is
required to adjust the loss allowance at the reporting date in accordance with Ind AS 109.
In determination of allowances for credit losses on trade receivables, the Company has used a
practical expedience by computing the expected credit losses based on ageing matrix, which has
taken into account historical credit loss experience and adjusted for forward looking information.
The Company determines its liquidity requirement in the short, medium and long term. This is done
by drawings up cash forecast for short term and long term needs.
The Company manage its liquidity risk in a manner so as to meet its normal financial obligations
without any significant delay or stress. Such risk is managed through ensuring operational cash flow
while at the same time maintaining adequate cash and cash equivalent position. The management
has arranged for diversified funding sources and adopted a policy of managing assets with liquidity
monitoring future cash flow and liquidity on a regular basis. Surplus funds not immediately required
are invested in certain mutual funds and fixed deposit which provide flexibility to liquidate. Besides,
it generally has certain undrawn credit facilities which can be assessed as and when required; such
credit facilities are reviewed at regular basis.
c The amounts are gross and undiscounted, and include contractual interest payments and exclude
the impact of netting agreements (if any). The interest payments on variable interest rate loans in
the tables above reflect market forward interest rates at the respective reporting dates and these
amounts may change as market interest rates change. The future cash flows on derivative instruments
may be different from the amount in the above tables as exchange rates change. Except for these
financial liabilities, it is not expected that cash flows included in the maturity analysis could occur
significantly earlier, or at significantly different amounts. When the amount payable is not fixed, the
amount disclosed has been determined with reference to conditions existing at the reporting date.
54.3 Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices. Market risk comprises three type of risks: Foreign Exchange Risk, Interest Rate Risk
and Other Price Risk.
54.3.1 Foreign Exchange Risk
Foreign Exchange Risk is the exposure of the Company to the potential impact of movements in foreign exchange
rates. The Company imports various raw materials viz. chemicals, drugs, API, packing materials viz. granules,
items of stores and spares and capital goods as per its requirements from time to time and also borrows funds
in foreign currencies. This results in foreign currency risk to the Company. Similarly, company's exports are also
exposed to foreign currency risks.
For the Foreign Exchange exposures risk management, the Company's Policy is to adopt a flexible approach
in hedging its risk. For this, the Company from time to time takes the view from banks and foreign exchange
experts and based upon the same and also considering macro-economic factors, forms a view and whenever
deemed necessary, hedges its foreign exchange risk. The hedging strategies are taken after careful study/
analysis of foreign exchange market to minimize to the extent possible, any effect of the fluctuation in foreign
exchange rates.
Sensitivity Analysis
A reasonably possible strengthening (weakening) of the INR against USD and EUR as at 31st March
would have affected the measurement of financial instruments denominated in a foreign currency
and affected equity and profit or loss by the amounts shown below. This analysis assumes that
all other variables, in particular interest rates, remain constant and ignores any impact of forecast
sales and purchases.
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 rates. the Company do not have any long¬
term debt obligations. Moreover, the short-term borrowings of the Company do not
have a significant fair value or cash flow interest rate risk due to their short tenure.
However, the Company is also exposed to interest rate risk on surplus funds parked in mutual funds
(debt oriented) and bonds measured at fair value through profit or loss.
The Company is exposed to equity price risk, which arises from mutual fund (equity oriented)
measured at fair value through profit or loss. In order to deploy the surplus funds, necessary
planning is done by the Finance & Accounts Department after considering the fund planning
of subsequent months and overall fund position. Various investments options are evaluated
within the investment options allowed by the Board to arrive at proper decision.
The Investment so made are reviewed every fortnight. To spread the concentration of funds
as well as risks, investments in Mutual Funds are scattered and utmost care and vigilance is
undertaken before deployment of funds for investment purpose to ensure credit worthiness
of the investment and availability of such surplus invested funds to meet any unforeseen sit¬
uation that may arise.
55. Capital Management
For the purposes of the Company's capital management, capital includes issued capital,
all other equity reserves and borrowed capital less reported cash and cash equivalents.
The primary objective of the Company's capital management is to maintain an efficient capital structure
to reduce the cost of capital, support the corporate strategy and to maximise shareholder's value.
The Company's policy is to borrow primarily through banks to maintain sufficient liquidity. The Company
also maintains certain undrawn committed credit facilities to provide additional liquidity. These
borrowings, together with cash generated from operations are utilised for operations of the Company.
The Company monitors capital on the basis of cost of capital. The Company is not subject to any externally
imposed capital requirements.
Note Explanations of the items given in numerator and denominator for the aforesaid ratios are:
a Current ratio (times) = Current assets divided by Current liabilities. Both numerator and denomi¬
nator can be identified from the balance sheet.
b Debt-equity ratio (times) = Total Debt divided by equity. Both numerator and denominator can be
identified from the balance sheet
c Debt service coverage ratio (times) = earnings available for Debt service divided by Debt service.
Earning for Debt service = Net profit after taxes Non-cash operating expenses like depreciation
and other amortisations Interest other adjustments like loss on sale of PP&E etc. Debt service
= Interest and principal repayments including lease payments
d Return on equity (%)= Net profit after tax reduced by preference dividend (if any) divided by aver¬
age shareholders equity.
e Inventory turnover ratio (times) = Sales divided by average inventory.
f Trade receivables turnover ratio (times) = Credit sales divided by average Trade receivable.
g Trade payable turnover ratio (times) = Credit purchases divided by average Trade payable.
h Net capital turnover ratio (times) = sales divided by working capital. working capital =Current
assets minus Current liabilities.
i Net profit ratio (%) = Net profit after tax divided by sales.
j Return on capital employed (%) = Earnings before interest and tax divided by capital employed.
Capital employed = tangible net worth total debt deferred tax liability.
k Return on investment (%) = Based on time weighted rate of return (TWRR) method as follows:
63.5 Utilisation of borrowed funds and share premium
a) The Company has not advanced or loaned or invested funds to any other person or entity, in¬
cluding foreign entities (Intermediaries) with the understanding (whether recorded in writing or
otherwise) that the Intermediaries shall directly or indirectly lend or invest in other persons or
entities identified in any manner whatsoever by or on behalf of the Company (ultimate beneficia¬
ries); or provide any guarantee, security or the like on behalf of the ultimate beneficiaries. during
the current year and previous year.
b) The Company has 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 directly or indirectly lend or invest in other persons or entities identified in any
manner whatsoever by or on behalf of the Funding party (ultimate beneficiaries); or provide any
guarantee, security or the like on behalf of the ultimate beneficiaries.
63.6 Undisclosed income
There is no income surrendered or disclosed as income during the current or previous year in
the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of
account.
63.7 Details of crypto currency or virtual currency
The Company has not traded or invested in crypto currency or virtual currency during the current
or previous year.
63.8 Registration of charges or satisfaction with Registrar of Companies
There are no charges or satisfaction which are yet to be registered with the Registrar of Compa¬
nies beyond the statutory period.
63.9 Details of Benami Transaction
There are no proceedings initiated or are pending against the Company for holding any benami
property under the Prohibition of Benami Property Transactions Act, 1988 and rules made there¬
under.
63.10 No Fraud Reporting
No fraud/material fraud by the Company or no fraud/ material fraud on the Company has been
noticed or reported and no whistle blower complaints received, during the year ended 31 March,
2026 and 31 March, 2025
64 Figures for the previous periods have been regrouped to conform to the figures of the current
periods as and when required.
The accompanying Notes are an integral part of the Financial Statements
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