N. Provisions
A provision is recognized if, as a result of a past event, the
Company has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an
outflow of economic benefits will be required to settle
the obligation. Provisions are measured at the present
value of management's best estimate of the expenditure
required to settle the present obligation at the end of the
reporting period.
Provisions are reviewed and adjusted, when required,
to reflect the current best estimate at the end of each
reporting period.
The Company recognizes decommissioning provisions
in the period in which a legal or constructive obligation
is incurred. A corresponding decommissioning cost is
added to the carrying amount of the associated property,
plant and equipment, and it is depreciated over the
estimated useful life of the asset.
O. Contingent Liabilities
Contingent liability is disclosed in case of:
• A present obligation arising from past events, when
it is not probable that an outflow of resources will be
required to settle the obligation;
• A present obligation arising from past events, when
no reliable estimate is possible;
• A possible obligation arising from past events whose
existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future
events beyond the control of the Company where the
probability of outflow of resources is not remote.
Contingent Assets
Contingent assets are not recognized but disclosed in
the Financial Statements when an inflow of economic
benefits is probable. Contingent assets are assessed
continually and, if it is virtually certain that an inflow of
economic benefits will arise, the asset and related income
are recognised in the period in which the change occurs.
}. Fair Value Measurements
Company follows the hierarchy mentioned underneath for
determining fair values of its financial instruments:
• 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 (prices) or indirectly (derived from
prices); and
• Level 3 - Inputs for the asset or liability that are not
based on observable market data.
The fair value of financial instruments traded in active
markets is based on quoted market prices at the reporting
dates. A market is regarded as active if quoted prices are
readily and regularly available from an exchange, dealer,
broker, industry group, pricing service, or regulatory
agency, and those prices represent actual and regularly
occurring market transactions on an arm's length basis.
The fair value for these instruments is determined using
Level 1 inputs.
The fair value of financial instruments that are not
traded in an active market (for example, over the
counter derivatives) is determined by using valuation
techniques. These valuation techniques maximize the
use of observable market data where it is available 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 fair valued using level 2
inputs.
If one or more of the significant inputs is not based on
observable market data, the instrument is fair valued
using Level 3 inputs. Specific valuation techniques used
to value financial instruments include:
• Quoted market prices or dealer quotes for similar
instruments
• The fair value of interest rate swaps is calculated as
the present value of the estimated future cash flows
based on observable yield curves
• The fair value of forward foreign exchange contracts
is determined using forward exchange rates at the
reporting dates, with the resulting value discounted
back to present value
• Other techniques, such as discounted cash flow
analysis, are used to determine fair value for the
remaining financial instruments.
R. Revenue Recognition
Revenue from contracts with customers is recognised
when control of the goods or services are transferred to
the customer at an amount that reflects the consideration
to which the Company expects to be entitled in exchange
for those goods or services.
The Company recognizes revenue from contracts with
customers based on a five-step model, such as to,
identifying the contracts with a customer, identifying the
performance obligations in the contract, determine the
transaction price, allocate the transaction price to the
performance obligations in the contract and recognize
revenue when (or as) the entity satisfies a performance
obligation at a point in time or over time.
The Company satisfies a performance obligation and
recognizes revenue over time, if one of the following
criteria is met:
• The customer simultaneously receives and
consumes the benefits provided by the Company
performance as the Company performs; or
• The Company's performance creates or enhances
an asset that the customer controls as the asset is
created or enhanced; or
• The Company's performance does not create an
asset with an alternative use to the Company and
the entity has an enforceable right to payment for
performance completed to date.
For performance obligations where one of the above
conditions are not met, revenue is recognized at the point
in time at which the performance obligation is satisfied.
S. Other Income
Interest Income
For all debt instruments measured either at amortized
cost or at fair value through other comprehensive
income, interest income is recorded using the effective
interest rate (EIR). EIR is the rate that exactly discounts
the estimated future cash payments or receipts over
the expected life of the financial instrument or a shorter
period, where appropriate, to the gross carrying amount
of the financial asset or to the amortized cost of a
financial liability. When calculating the effective interest
rate, the Company estimates the expected cash flows
by considering all the contractual terms of the financial
instrument (for example, prepayment, extension, call and
similar options) but does not consider the expected credit
losses. Interest income is included in finance income in
the Statement of Profit and Loss.
Interest income on fixed deposits is recognized on a
time proportion basis taking into account the amount
outstanding and the applicable interest rate.
Dividend income
Dividend income is recognized at the time when right to
receive the payment is established, which is generally
when the shareholders approve the dividend.
T. Foreign Currency Transactions
Functional and Presentation Currency
The Financial statements are presented in Indian Rupee
(INR/?) which is also the functional and presentation
currency of the Company.
Transactions and Balances
Transactions in foreign currencies are translated to
the functional currency at exchange rates in effect on
transaction date. At each reporting date, monetary
assets and liabilities denominated in foreign currencies
are translated at the exchange rate in effect at the date of
Financial Statement.
The translation for other non-monetary assets and
liabilities are not updated from historical exchange rates
unless they are carried at fair value.
U. Government Grants
Government grants are recognized where there is
reasonable assurance that the grant will be received
and all attached conditions will be complied with. When
the grant relates to an expense item, it is recognized as
income on a systematic basis over the periods that the
related costs, for which it is intended to compensate,
are expensed. When the grant relates to an asset, it is
recognized as income in equal amounts over the expected
useful life of the related asset.
V. Earnings per share
Basic earnings per share are calculated by dividing the
profit attributable to owners of the Company by the
weighted average number of equity shares outstanding
during the financial year, adjusted for bonus elements
in equity shares issued during the year and excluding
treasury shares.
Diluted earnings per share adjust the figures used in the
determination of basic earnings per share to take into
account, the after income tax effect of interest and other
financing costs associated with dilutive potential equity
shares and the weighted average number of additional
equity shares that would have been outstanding assuming
the conversion of all dilutive potential equity shares.
W. Segment Reporting
Operating segments are identified and reported in a
manner consistent with the internal financial reporting
provided to the chief operating decision makers,
responsible for allocating resources and assessing
performance of the operating segments.
X. Events after reporting date:
Where events occurring after the Balance Sheet date
provide evidence of conditions that existed at the end
of the reporting period, the impact of such events is
adjusted within the Financial Statements. Non Adjusting
events after the Balance Sheet date which are material
in size or nature are disclosed separately in the Financial
Statements.
33 EARNING PER SHARE
The Company's Earnings Per Share ('EPS') is determined based on the net profit attributable to the shareholders of the
Company. Basic earnings per share is computed using the weighted average number of shares outstanding during the year.
Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent
shares outstanding during the year including share options, except where the result would be anti-dilutive.
34 EMPLOYEE BENEFITS
Leave of absence and encashment:
The Company has different leave plans including paid leave of absence plans and encashment of leave plans for employees
at different grades and provision has been made in accordance with Ind AS-19. The total amount of provision available for the
unavailed leave balances as at 31st March 2025 is INR 61 Lakhs (as at 31st March 2024 INR 51.78 Lakhs). Liability has been
created based on actuarial valuation done during the year, with the Discount rate of 6.71% (Prev. Year 7.21%)
Defined Benefit Plans
The Company has a defined benefit gratuity plan, which is regulated as per the provisions of Payment of Gratuity Act, 1972.
Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on
retirement/ termination is the employee's last drawn basic salary per month computed proportionately for 15 days salary
multiplied for the number of years of service. The scheme is funded by the Company. The liability for the same is recognized
on the basis of actuarial valuation
Note : Sensitivity due to mortality and withdrawals are not material and hence impact of change not calculated.
Defined Contribution Plans
In respect of the defined contribution plan (Provident fund), an amount of INR 76.28 Lakhs (31st March 2024: INR 70.66
Lakhs) has been recognized as expenditure in the Statement of Profit and Loss.
In respect of the State Plans (Employee State Insurance), an amount of INR 6.54 Lakhs (31st March 2024: INR 6.29 Lakhs)
has been recognized as expenditure in the Statement of Profit and Loss.
During the year the Company has provided Bonus and incentive of INR 107.18 Lakhs (31st March 2024: INR 118.54 Lakhs) as
expenditure in the Statement of Profit & Loss.
the relevant claims stands extinguished. The Company has also filed writ petitions before the Honourable Madras High Court
requesting the demand to be quashed.
*The Income Tax Refund amounting to INR 45.17 Lakhs has been adjusted against the previous years demand by the
Income Tax Department. The Company has filed the writ petition in Honourable Madras High Court against such demands
which has been issued by the Centralized Processing Centre ("CPC"). The management of the Company is of the view that
post completion of CIRP no such demands is payable by the Company. Based on the writ petition filed by the Company, the
management is confident of obtaining a favourable outcome in this regard.
**The Company has received the demand of INR 265.42 Lakhs including penalties for the period FY 2017-18 to FY
2020-21against which a liability of INR 29.95 Lakhs has been paid by the Company. The Company has disputed INR 235.47
Lakhs and filed the appeal with CGST Appeals. Based on the management assessment, the Company is of the opinion that
said demand will be set aside and there will be no liability.
36 The Company has received communications from BSE Limited and National Stock Exchange of India Limited regarding
the non-compliance with respect to certain regulations including Minimum Public Shareholding ("MPS") requirements
specified in Rule 19 (2) and Rule 19A of the Securities Contracts (Regulations) Rules, 1957, as amended and Regulation 38
of the Listing Obligations and Disclosure Requirements Regulations of Securities Exchange Board of India ("SEBI") ("Listing
Regulations"). The Company has created a provision of INR 163.68 Lakhs as on 31st March 2025 (as on 31st March 2024: INR
88.39 Lakhs) towards penalties and also the Company has requested waiver for such penalties and also subsequently met
the MPS criteria. Based on the internal assessment and communication with the BSE Limited and National Stock Exchange
of India Limited, the management is confident of obtaining waiver from such penalties.
37 SEGMENT REPORTING
The Company is engaged in the business of manufacturing and trading of pharmaceuticals products. The Chief Operating
Decision Maker monitors the operating results of its business for the purpose of making decisions about resource allocation
and performance. Manufacturing and trading of pharmaceuticals products is considered as only segment.
39 CAPITAL MANAGEMENT
The objective of the Company's capital management structure is to ensure sufficient liquidity to support its business, to
ensure the Company's ability to continue as a going concern and provide adequate return to shareholders.
The Company monitors capital and the long term cash flow requirements including externally imposed capital requirements
of the business on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face.
Management assesses the Company's capital requirements in order to maintain an efficient overall financing structure while
avoiding excessive leverage. This takes into account the subordination levels of the Company's various classes of debt. The
40 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Financial Risk Management Framework
Company's principal financial liabilities comprises of borrowings, trade payables and Other financial liabilities. The main
purpose of these financial liabilities is to finance the Company's operations. The Company's principal financial assets include
trade receivables, loans, cash and bank balances and other financial assets.
Risk Exposures and Responses
The Company is exposed to market risk, credit risk and liquidity risk. The Board of Directors reviews policies for managing
each of these risks, which are summarised below.
i) Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the
price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates,
foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market risk sensitive
instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits,
foreign currency receivables, payables and borrowing.
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 rates relates primarily to the
Company's borrowing with floating interest rates. The Company constantly monitors the credit markets and rebalances its
financing strategies to achieve an optimal maturity profile and financing cost. The Company's exposure to interest rate risk
relates primarily to interest bearing financial liabilities. Interest rate risk is managed by the Company on an on-going basis
with the primary objective of limiting the extent to which interest expense could be affected by an adverse movement in
interest rates.
There are no hedging instruments to mitigate this risk.
Sensitivity Analysis
An increase/decrease of 100 basis points in interest rate at the end of the reporting period for the variable financial instruments
would increase/(decrease) profit before taxation for the year by the amounts shown below. This analysis assumes all other
variables remain constant.
Foreign currency risk is the risk that the fair value of future cash flows of a financial instruments will fluctuate because of
changes in foreign exchange rates. The Company is exposed to foreign exchange risk arising from transactions i.e. import
and export of materials, recognised assets and liabilities denominated in a currency that is not the Company's functional
currency. The Company's foreign currency risks are identified, measured and managed at periodic intervals in accordance
with the Company's policies.
Commodity Risk
Exposure to market risk with respect to commodity prices primarily arises from the Company's purchases of Active
Pharmaceutical Ingredients and other direct materials, whose prices are exposed to risk of fluctuation over a period of
time. The prices of the Company's raw materials generally fluctuate in line with commodity cycles, although the prices of
raw materials used in the Company's active pharmaceutical ingredients business are generally more volatile. Cost of raw
materials forms the largest portion of the Company's cost. Commodity price risk exposure is evaluated and managed through
operating procedures and sourcing policies. As of 31st March, 2025, the Company had not entered into any material derivative
contracts to hedge exposure to fluctuations in commodity prices.
ii. Credit risk
Credit risk is the risk of financial loss to the Company if the customer or that counterparty to the financial instrument
fails to meet its contractual obligations and arises principally from the Company's receivables from customers, loans and
investments. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the
creditworthiness of counterparty to which the Company grants credit terms in the normal course of business.
Credit risk management
The finance function of 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 assesses the credit
risk for each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets.
The risk parameters are same for all financial assets for all periods presented. The Company considers the probability of
default upon initial recognition of asset and whether there has been a significant increase in credit risk on an on-going basis
throughout each reporting period. In general, it is presumed that credit risk has significantly increased since initial recognition
if the payments are more than 30 days past due . A default on a financial asset is when the counterparty fails to make
contractual payments when they fall due. This definition of default is determined by considering the business environment in
which entity operates and other macro-economic factors.
Trade Receivables: The Company has exposure to credit risk from trade receivables on sale of pharmaceuticals products
and related services. The Company has used Expected Credit Loss (ECL) model for assessing the impairment loss. For that
purpose, the Company uses a provision matrix to compute the ECL amount. The provision matrix takes into account external
and internal risk factors and historical data of credit losses from various customers. The Company ensures concentration of
credit does not significantly impair the financial assets since the customers to whom the exposure of credit is given are well
established and reputed industries engaged in their respective field of business. The creditworthiness of customers to which
the Company grants credit in the normal course of the business is monitored regularly. The Company provides for expected
credit loss under simplified approach.
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.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of
funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the
business, the Company maintains flexibility in funding by maintaining availability under committed facilities. The Company's
treasury team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies
related to such risks are overseen by senior management. Management monitors the Company's liquidity position through
rolling forecasts on the basis of expected cash flows.
41 FAIR VALUE MEASUREMENTS
(i) Fair value hierarchy
Financial assets and Financial Liabilities measured at fair value in the Financial Statements are grouped into three Levels of
a fair value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, 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 (prices)
or indirectly (derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable market data.
43 LEASES
Company as lessee
The Company has entered into certain cancellable lease agreements mainly for office premises, land and infrastructure facilities'
which are renewable on mutual agreement with the parties. At the date of commencement of the lease, the Company recognises a
right of use asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for short-term leases
and low value leases. The Company applies the "short term lease" & "low value leases" recognition exemptions for these leases.
Rent Expenses recorded for Short term and Low value lease was INR 22.53 Lakhs (31st March, 2024: INR 20.99 Lakhs).
44 INCOME TAX
The Company has opted for the new tax regime U/s 115BAA of the Income Tax Act from Financial Year ended 31st March
2023. The Company has carried forward losses and unabsorbed depreciation of earlier years. Therefore, the Company has
not accounted any Income Tax on the profits earned during the year.
45 DEFERRED TAX
Deferred Tax assets arises on account of carried forward losses and unabsorbed tax depreciation. As a prudent measure
DTA is not recognised since it is not probable that future taxable profits will be available against which carried forward losses
and unabsorbed tax depreciation can be utilised.
46 CORPORATE SOCIAL RESPONSIBILITY (CSR)
(a) As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the Company. The areas for CSR
activities are promoting education, preventive healthcare, special education and employment enhancing vocation skills,
rural /nationally recognised/ Paralympic and Olympic sports, and Rural Development.
For the year ended 31st March 2024, the Company has transferred the unspent amount to the specified funds within the the
time period for such transfer i.e. six months from the end of the Financial Year ended 31st March 2024.
47 DISCLOSURES OF THE TRANSACTIONS WITH STRUCK OFF COMPANIES
The Company did not have any transactions with companies struck off under Section 248 of the Companies Act, 2013 or
Section 560 of Companies Act, 1956 during the financial year.
48 ADDITIONAL REGULATORY INFORMATION REQUIRED BY SCHEDULE III TO THE COMPANIES ACT, 2013
(i) The Company does not have any Benami property held in its name. No proceedings have been initiated on or are
pending against the Company for holding benami property under the Prohibition of Benami Property Transactions Act,
1988 and Rules made thereunder.
(ii) The Company has not been declared wilful defaulter by any bank or financial institution or other lender or government
or any government authority.
(iii) The Company does not hold any investments in any subsidiary(ies), therefore, the provisions for compliance with the
number of layers prescribed under clause (87) of section 2 of the Companies Act, 2013 read with the Companies
(Restriction on number of Layers) Rules, 2017 (as amended) are not applicable.
(iv) Details of transactions of advances or loans or investments of funds (either from the borrowed funds or share premium
or any other sources or kind of funds), as prescribed to any other person(s) or entity (ies), including foreign entities
(intermediaries)
A 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 loan to or on behalf of the ultimate beneficiaries
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:
(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 loan on behalf of the ultimate beneficiaries
(v) 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 Income Tax Act, 1961.
(vi) The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year.
(vii) No Scheme of Arrangements have been approved by the Competent Authority in terms of Sections 230 to 237 of the
Act, during the year.
49 The Company has foreign currency receivables as on 31st March, 2025 of INR 120 Lakhs (31st March 2024: INR 174 Lakhs)
which are outstanding beyond the stipulated time period permitted under the RBI Master Direction on Export of Goods and
Services vide FED Master Direction No. 16/2015-16 dated 1st January, 2016 (as amended), issued by the Reserve Bank of
India (RBI) as of 31st March, 2025. The management of the Company is in the process of obtaining approval for extension of
time limits for realization and also in process of receiving the payment and in regular discussion with the Customers. The
Management of the Company is confident of obtaining the approval for time extension and recovery of the amount within
such extended time period.
51 The Board of Directors of the Company, at its meeting held on 13th August 2024, had approved the sale of assets of the
manufacturing unit of the Company located at Madhavaram, subject to regulatory approvals, which was also approved by
the shareholders at Annual General Meeting held on 25th September 2024. Accordingly, the assets of the Madhavaram unit is
classified as "Non Current Assets Held for Sale". The management expects the sale process to be concluded in the ensuring
periods.
52 Previous year figures have been regrouped/reclassified where ever necessary, to conform to those of the current year.
53 As allowed under Schedule III of the Companies Act, 2013, Financial Statements are prepared in Lakhs and rounded off to
two decimals. The amounts / numbers below one thousands are appearing as zero.
In Terms of our Report of even date
For Brahmayya & Co. For and on behalf of the Board
Chartered Accountants Bafna Pharmaceuticals Limited
Firm Regn No. 000511S
S. Hemalatha Vinayak Dinesh Dendukuri Bafna Mahaveer Chand
Whole Time Director Whole Time Director Chief Executive Officer
DIN : 02714329 DIN : 07601309
Lokesh Vasudevan Melagiri Sridhar Mohanachandran A
Partner Chief Financial Officer Company Secretary
M.No. 222320 M.No.65827
Place: Chennai Place: Chennai
Date: 26th May 2025 Date: 26th May 2025
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