(n) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised if as a result of a past event, the Company has a present obligation (legal or constructive) that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognised at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability.
A contingent liability exists when there is a possible but not probable obligation, or a present obligation that may, but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably. Contingent liabilities do not warrant provisions but are disclosed unless the possibility of outflow of resources is remote. Contingent assets are neither recognised nor disclosed in the financial statements. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.
(o) Earnings per share (EPS)
Basic EPS is computed using the weighted average number of equity shares outstanding during the period. Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the period except where the results would be anti-dilutive.
(p) Current vs non-current classification
The company presents assets and liabilities and the balance sheets based on current /non-current classification. An asset is treated as current, when it is:
• Expected to be realized or intended to be sold or consumed in normal operating cycle.
• Held primarily for purpose of trading.
• Expected to be realized within twelve months after the reporting period, or
• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in normal operating cycle.
• It is held primarily for the purpose of trading.
• It is due to be settled within twelve months after the reporting period, or
• There is no unconditional right to defer the settlement of liability for at least twelve months after the reporting period.
The company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non- current assets and labilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The company has identified 6-9 months as its operating cycle.
(q) Key estimates and assumptions
The preparation of financial statements in accordance with Ind AS requires use of estimates and assumptions for some items, which might have an effect on their recognition and measurement in the balance sheet and statement of profit and loss. The actual amounts realised may differ from these estimates.
Estimates and assumptions are required in particular for:
• Determination of the estimated useful lives of tangible assets and intangible assets and the assessment as to which components of the cost may be capitalized.
Useful lives of tangible assets and intangible assets are based on the life prescribed in Schedule II of the Companies Act, 2013. In cases, where the useful lives are different from that prescribed in Schedule II, they are based on management estimate, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers’ warranties and maintenance support. Assumptions also need to be made, when the Company assesses, whether an asset may be capitalized and which components of the cost of the asset may be capitalised.
• Recognition and measurement of defined benefit obligations
The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation and vested future benefits and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the post-employment benefit obligations.
• Provisions and contingent liabilities
The Company exercises judgment in measuring and recognising provisions and the exposures to contingent liabilities related to pending litigation or other outstanding claims subject to negotiated settlement, mediation, arbitration or government regulation, as well as other contingent liabilities. Judgment is necessary in assessing the likelihood that a pending claim will succeed, or a liability will arise, and to quantify the possible range of the financial settlement. Because of the inherent uncertainty in this evaluation process, actual losses may be different from the originally estimated provision.
• Measurement of fair values
The Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Company has an established control framework with respect to the measurement of fair values. The finance team has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the CFO.
They regularly review significant unobservable inputs and valuation adjustments. If third party information is used to measure fair values then the finance team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1 : quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 : inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices)
• Level 3 : inputs for the asset or liability that are not based on observable market data (unobservable inputs)
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
(r) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial statements are presented in Indian rupee (?), which is companies functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit and loss.
(s) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs (upto 2 decimal) as per the requirement of Schedule III, unless otherwise stated.
(t) Recent 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 31st March ,2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
B. Measurement of fair values
Ind AS 107, ‘Financial Instrument - Disclosure’ requires classification of the valuation method of financial instruments measured at fair value in the Balance Sheet, using a three level fair-value-hierarchy (which reflects the significance of inputs used in the measurements). The hierarchy gives the highest priority to un-adjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to un-observable inputs (Level 3 measurements). Fair value of derivative financial assets and liabilities are estimated by discounting expected future contractual cash flows using prevailing market interest rate curves. The three levels of the fair-value-hierarchy under Ind AS 107 are described below:
Level 1: Level 1 Heirarchy includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market are 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.
Level 3: If one or more of the significant inputs are not based on observable market data, the instrument is included in level 3. e.g. unlisted equity securities.
I. Risk management framewor
The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company risk management framework. The Board of Directors is responsible for developing and monitoring the Company risk management policies.
The Company’s risk management controls are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management controls and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The audit committee oversees how management monitors compliance with the company’s risk management procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and adhoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.
ii. 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 and investments in debt securities, cash and cash equivalents, mutual funds, bonds etc.
The carrying amount of financial assets represents the maximum credit exposure.
Trade and other receivables
Around 47% of the sales are export sales. For major part of the sales, customer credit risk is managed by requiring domestic and export customers to pay advances before transfer of ownership, therefore substantially eliminating the Company’s credit risk in this respect.
Based on prior experience and an assessment of the current economic environment, management believes that no provision is required for credit risk wherever credit is extended to customers.
Management believes that the unimpaired amounts that are past due by more than 6 months are still collectible in full, based on historical payment behaviour.
Concentration of credit risk
At 31st March 2024, the carrying amount of the Company's most significant customer is Rs. 7759.73 lakhs (31st March, 2023 : Rs. 5822.59 lakhs)
Loan to others
The credit worthiness of the counter party is evaluated by the management on an ongoing basis and is considered to be good. The Company did not have any amounts that were past due but not impaired.The Company has no collateral in respect of these loans.
Investment in mutual funds and bonds
The investment in mutual funds, Government bonds are entered into with credit worthy fund houses, Government of India and financial institution respectively. The credit worthiness of these counter parties are evaluated by the management on an ongoing basis and is considered to be good. The Company does not expect any losses from non-performance by these counter-parties.
Cash and cash equivalents
Credit risk from balances with banks is managed by the Company's treasury department in accordance with the company's policy. Investment of surplus funds are made in mainly in mutual funds with good returns and within approved credit ratings.
Other than trade and other receivables, the Company has no other financial assets that are past due but not impaired.
iii. Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company’s reputation.
The Company has obtained fund and non-fund based working capital lines from one bank. The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.
As at 31st March, 2024, the Company had working capital of Rs. 18,350.53 lakhs, including cash and cash equivalents of Rs. 967.35 lakhs and highly marketable current investments of Rs.5505.41 lakhs.
As at 31st March, 2023, the Company had working capital of Rs.14,627.66 lakhs, including cash and cash equivalents of Rs. 665.16 lakhs and highly marketable current investments of Rs. 5115.01 lakhs.
iv. Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchange rates ) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and long-term debt. The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of its investments. Thus, the Company’s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.
a) Currency risk
The company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchase, other expenses and borrowings are denominated and the functional currency of the company. The functional currency of the company is Indian Rupees (INR). The currencies in which these transactions are primarily denominated is USD.
NOTE NO.37 Hedge accounting
As part of its risk management strategy,the company endeavors to hedge its net foreign currency exposure of highly forecasted foreign currency transactions. The company uses forward contracts to hedge its currency exposure. Such contracts are designated as cash flow hedges.
The forward contracts are generally denominated in the same currency in which the sales realization is likely to take place.
Financial contracts designated as hedges are accounted for in accordance with the requirements of Ind AS 109 depending upon the type of hedge.
NOTE NO. 38
I) Related Party Disclosures *
(Where transactions have taken place)
a) Key Management Personnel (KMP)
Ritesh B. Shah (Joint Managing Director), Vivek B. Shah (Joint Managing Director), Darshan Rampariya (Chief Financial Officer), Manan Vadhan (Company Secretary and Compliance Officer) w.e.f. 4th April, 2024, Hemant Auti (ExCompany Secretary and Compliance Officer) upto 14th January, 2024., Jinal D. Mehtalia (Ex-Company Secretary and Compliance Officer) w.e.f. 15th January, 2024 to 14th February, 2024
b) Relatives of Key Management Personnel :
Bharat N. Shah, Gaurav Satish Shah ,Bipin N Shah
c) Other Related Parties -(Enterprises-KMP having significant influence/owned by major shareholders)
S Kant Healthcare Ltd, Sevantilal Kantilal Trust, Eskay Iodine Pvt. Ltd., S.Kant Chemicals Pvt. Ltd. and S K &Others , SK Logistic
NOTE NO.53
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 has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(iv) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
(v) The Company has 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.
(vi) 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 :
(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.
(vii) The Company does not have any such transaction which is not recorded in 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 I ncome Tax Act, 1961.
(viii) The Company has not granted Loans or Advances in the nature of loans to promoters, directors and the related parties except for loan to KMP (refer note no. 38)
(ix) The title deeds of all the immovable properties, (other than immovable properties where the Company is the lessee and the lease agreements are duly executed in favour of the Company) disclosed in the financial statements included in property, plant and equipment and capital work-in progress are held in the name of the Company as at the balance sheet date.
(x) The Company does not have any transactions with companies which are struck off.
NOTE NO.55
EVENTS AFTER THE REPORTING PERIOD
The Board of Directors have recommended a final dividend of Rs. 2.50 (50%) per equity share of Rs.5/-each.
NOTE NO.56
Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/disclosure.
As per our report of even date attached
For JAYANTILAL THAKKAR & CO. For ANUH PHARMA LTD.
Chartered Accountants
(Firm Reg. No. 104133W) RITESH SHAH VIVEK SHAH ARUN TODARWAL
Joint Managing Director Joint Managing Director Chairman
DILIP J. THAKKAR (DIN: 02496729) (DIN: 02878724) (DIN: 00020916)
Membe rs h i p no : 1 1 6279 darshan rampariya manan vadhan
Chief Financial Officer Company Secretary
Mumbai: 17th May 2024 Mumbai: 17th May 2024
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