Note No. : 1 Significant accounting judgment , estimates and assumptions

The preparation of the financial statements requires the use of accounting estimates, which, by definition would seldom equal the actual results. Management also needs to exercise judgment and make certain assumptions in applying the Company” accounting policies and preparation of financial statements

The use of such estimates, judgments and assumptions affect the reported amounts of revenue, expenses, assets and liabilities including the accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in the future periods.

Estimates and judgments 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.

Estimates and assumptions

The Company has based its assumptions and estimates on parameters available when the financial statement were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the company. Such changes are reflected in the assumptions when they occur.

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are described below.

i) Depreciation and useful lives of property, plant and equipment: Property, plant and equipment are depreciated over the estimated useful lives of the assets, after taking into account their estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation to be recorded during any reporting period. The useful lives and residual values are based on the Company’s historical experience with similar assets and take into account anticipated technological changes. The depreciation for future periods is adjusted if there are significant changes from previous estimates.

ii) Income Tax: Management judgment is required for calculation of income tax and deferred tax assets and liabilities. Deferred tax assets are recognized for unused losses (carry forward of prior years’ losses) and unused tax credit to the extent that it is probable that taxable profit would be available against which the losses could be utilized. The company review at each balance sheet date the carrying amount of deferred tax. the factor used in estimate may differ from actual outcome which may lead to significant adjustment in the amounts in financial statement.

Minimum Alternative Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period; in the year in which the MAT credit becomes eligible to be recognized as an asset. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period

iii) Recoverability of trade receivable: Judgments are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.

iv) Provisions: Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgment to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.

v) Impairment of non-financial assets: The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transaction are taken into account, if no such transactions can be identified, an appropriate valuation model is used.

vi) Estimation of Defined benefit obligations The company’s obligation on account of gratuity and compensated absences is determined based on actuarial valuation.

The company’s obligation on account of gratuity and compensated absences is determined based on actuarial valuation.

An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each financial year end.

The parameter must subject to change is the discount rate. In determining the appropriate discount rate , the management considers the interest rate of government bonds in currencies consistent with currencies of the post employment benefit obligation.

The mortality rate is based on publically available tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected inflation rates.

vii) Impairment of financial assets: The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

viii) Fair value measurement of financial instruments: The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

ix) Material uncertainty about going concern: In preparing financial statements, management has made an assessment of Company’s ability to continue as a going concern. Financial statements are prepared on a going concern basis. The Management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the Company’s ability to continue as a going concern.

Note no.: 31

a) All the Current Assets, Loans and Advances, in the opinion of the Board, have a value on Realization which in the ordinary course of business shall at least be equal to the amount at Which it is stated in the Balance Sheet.

b) In terms of Ind AS 36 on impairment of assets, there was no impairment indicators exist as of reporting date as per the internal management estimates done and hence no impairment charge is recognized during the year under review.

c) Segment Information:

The Managing Director has been identified as the Company’s Chief Operating Decision -Maker (CODM) as defined by IND AS- 108 Operating Segments. The Chief Operational Decision Maker monitors the operating results of its business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements.

Employee Benefits :

As per Indian Accounting Standard - 19 “Employees Benefits”, the disclosures of Employees Benefits are as follows:

Defined Contribution Plan:

Employee benefits in the form of Provident Fund are considered as defined contribution plan. The contribution to the respective fund are made in accordance with the relevant statute and are recognized as expense when employees have rendered service entitling them to the contribution, The contribution to defined contribution plan, recognized as expense in the statement of Profit and Loss are as under :

Gratuity

The gratuity plan is governed by the payment of Gratuity Act 1972, under the said Act an employee who has completed five years of service is entitled to specific benefit. The gratuity plan is being maintained by LIC for the company which provides payment as per the Government of India notification time being in force, to employees at retirement death, incapacitation or termination of employment.

Leave Travel Concession:

(i) Rs.NIL have been paid as LTC (All India) claimed (Previous Year Rs.3.06 lacs).

(ii) Rs.NIL lacs have been paid as LTC (Home Town) claimed(Previous Year Rs.1.21 lacs).

d) Contingent Liabilities:-

Claim against the company not acknowledged as debts are Rs.396.36 lacs (PY Rs.434.72 lacs) which includes:-

1. Land Cases:- Liability for the land compensation cases pending the outcome of appeal before Hon’ble High Court, Allahabad. However, decision of District Court, Bulandshahr was against the company and the figures have been computed on the basis of District Court order:Rs.12.12 lacs including interest (PY.Rs.12.12 lacs including interest).

2. Staff Litigations:- Litigation is pending in the cases filed against the company by the then staff i.e. Mr. Bhaskar Gupta & (Col.) V. K. Sethi for the subsistence allowance & salary respectively: Rs.2.55 lacs in total (PY Rs. 38.26 lacs in total)

3. Income Tax: Income tax authority raised the demand of penalty u/s 271 (1) (c) of income tax act 1961. The company being not agreed with demand preferred an appeal before the appellant authority which is pending on the date of balance sheet. The amount in dispute is Rs. 34.61 lacs excluding interest ( Previous year Rs.34.61 lacs excluding interest)

4. Custom Duty demand: Custom duty demand order 08.03.2016 from Commissioner Central Excise against the appeal of original demand of Rs.192.81 lacs and confirmed the demand and penalty with further interest confirmed. The company not agreed with the order, preferred an appeal before the Custom Excise & Service Tax Appellate Tribunal, Allahabad. The amount in dispute is Rs.542.54 lacs considering interest up to 31.03.2017. Since company has already provided Rs.192.81 lacs on the basis of original demand in the books of accounts. Therefore difference of Rs.349.73 Lacs further not considered for provision as the matter is pending in appellate tribunal.

e)Governments Grants

(i) Capital Grant for Rs. 311 Lakhs (Rupees Three Hundred & Eleven Lakhs) was sanctioned by Government of India during the year 2006-2007 for setting up manufacturing facilities and infrastructure improvement for manufacture of production of Zinc dispersible Tablets. Interest earned on the grant received for manufacturing facilities and infrastructure improvement for manufacturing of production of Zinc dispersible Tablets has been credited to the Grant account as per terms of Grant. The manufacturing facility completed in June 2009.

Above balance of Rs.11.08 lacs include TDS recoverable of Rs.1.35 lacs on interest earned on grant.

(ii) Company has received capital grant of Rs.101.72 lacs (Rs.58.00 lacs in the financial year 2010 11 and Rs.43.00 lacs in the financial year 2011-12) from Govt. of India for setting up of R&D facilities for trial production of Iron Folic Acid Dispersible tablets. Interest earned on capital grant received for the Iron Folic Acid project has been credited to the grant account as per the terms of the grant. Iron Folic Acid project is under progress and is yet to be commissioned. However, necessary approvals on this part from Govt. of India will be taken after the completion of the project. The company is hopeful for getting the extension for excess amount spent on

(iv) Company has received capital/revenue grant of Rs. 476.35 lacs (2010-11) from Govt. of India for setting up of manufacturing and infrastructure facility Up gradation for process Optimization and Quality Improvement of Oral Polio Vaccine Formulation Facility. Interest earned on capital grant received for the infrastructure facility Up gradation for process Optimization and Quality Improvement of Oral Polio Vaccine Formulation Facility has been credited to the grant account as per the terms of the grant. Infrastructure facility up gradation for process Optimization and Quality Improvement of Oral Polio Vaccine Formulation Facility project is under progress and is yet to be commissioned. However, necessary approvals on this part from Govt. of India will be taken after the completion of the project. The project was scheduled to be completed by 31^st May 2011.

f) Under Micro, Small and Medium Enterprises Development Act, 2006, creation disclosures required to

be made relating to such enterprises. In view of the insufficient information from supplier’s regarding their coverage under the said Act, no disclosure has been made in the accounts. However, in view of the management the impact of interest if any, that may be payable in accordance with the provision of the Act is not expected to be material.

g) The Ministry of Health and Family Welfare (Trade Receivable) has deducted charges for late delivery amounting Rs.645.42 lacs which has not been accounted for in the books of accounts as the same is not sustainable in the opinion of the management and the company is pursuing the matter with the concerned Ministry for the payment of these deductions.

h) Any gains or loss arising on account of exchange difference either on settlement or on translation is accounted for in the Statement of Profit & Loss, In this regard during the year, company has booked net Profit Rs.40.03 lacs. (P.Y. loss of Rs.74.35 lacs).

i) There is stock lying in the store which is issued to the functional division and return back in the sore department at the adhoc value of the Rs.12.72 lakhs

(i) Parties where control exists NIL

(ii)Other related parties where transaction have taken place during the year

a. Key Management Personnel (KMP):

1) Prof. G.Padmanaban Chairman

2) Sh.Chandra Prakash Goyal Managing Director

3) Dr. Y. K. Gupta Director

4) Dr. Alka Sharma Director

5) Sh. Roshan Lal Director

6) Dr. Chitra Mandal Director

7) Dr. Kanury Rao Director

8) Dr. Mohd. Aslam Director

9) Dr. SudhanshuVarati Director

10) Mr. Uttam Kumar Singh (C.F.O)( upto 09.03.2018)

11) Mr. Sandip Kumar Lal Company Secretary

P.) Deferred Tax Assets in respect of Unabsorbed Depreciation Losses & Unabsorbed Business Losses has been recognized by the Company. The management is of the view that company will realize the benefits of those recognized deductable difference, carry forward losses and portion of unused tax credit based on project in hand and projected future taxable income from projects in hand.

Note No. 2 - Financial Risk Framework

The Company’s financial liabilities comprise borrowings, capital creditors and trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s financial assets include Loans, trade and other receivables, cash and cash equivalents.

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management overseas the management of these risks. The Company‘s senior management provides assurance that the company’s financial risks activities, are governed by appropriate policies and risk objectives. All derivative activities for risk management purpose are carried out by teams that have appropriate skills, experience and supervision. The Board of Directors reviews and agrees policies for managing g each of these risks, which are summarized below:

A. Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market price. Market risk comprises three types of risk interest rate risk, currency risk and other risks, such as regulatory risk and commodity price 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 rates relates primarily to the company’s borrowing obligations with floating interest rates.

Sensitivity

Almost 100% of the Company’s borrowings are linked to SBI base rates of the banks. With all other variables held constant, the following table demonstrates the Impact of change in interest rate on borrowing cost on floating rate portion of loans.

ii) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates, The company’s exposure to the risk of changes in foreign exchange rates relates primarily to the exports made by the company which are made during the year however same is very negligible as compare to total turnover.

Sensitivity

1% increase or decrease in foreign exchange rates will have no material impact on profit.

B Credit risk

Credit risk is the risk that counterparty will default on its obligations under a Contractual arrangement leading to a financial loss. The company’s sales are mostly to Central Government, thereby the credit default risk is significantly mitigated.

Financial assets are written off when there is no reasonable expectation of recovery, however, the company continues to attempt to recover the receivables. Where recoveries are made, these are recognized in the statement of profit and loss.

Following table summarizes the change in loss allowances measured using life time expected credit loss model. No significant changes in the estimation techniques or assumption were made during the period.

Balances with Banks - Other Financial Assets

Credit risk from balances with banks is managed in accordance with Company’s policy. Company considers factors such as track record, size of the institution, market reputation and service standards to select the banks with which term deposits are maintained. Generally, term deposits are maintained with banks with which Company has also availed borrowings.

The company ‘s maximum exposure to credit risk for the components of the balance sheet as at 31st March , 2018 , 31st March , 2017 and 1st April 2016 is the carrying amounts as stated under Note No.18’.

C Liquidity risk

i) Liquidity Risk Management

Liquidity risk is the risk that a company may encounter difficulties in meeting its obligations associated with financial liabilities that are settled by delivering cash or other financial assets. The Company’s objective is to maintain optimum levels of liquidity to meet its cash and its collateral requirements. The company’s Management is responsible for liquidity, funding as well as settlement. Management monitors the company’s net liquidity position through rolling, forecast on the basis of expected cash flows

Note No. :3 - Capital Management a) Risk Management

For the purpose of the Company’s capital management, capital includes issued equity capital, securities premium and all other equity reserves attributable to the equity shareholder of the Company. The Primary objective of capital management is to maximize shareholder value and also to maintain an optimum capital structure and to safeguard its ability to continue at a going concern.

The Company’s Capital management objectives are to maintain equity including all reserve to protect economic viability and to finance any growth opportunities that may be available in future so as to maximize shareholder value

The Company manages its capital structure and makes adjustments in the amount of dividends, return on capital to shareholders, issue new shares or sell assets to reduce debts.

b) Loan Covenants:

In order to achieve this overall objective the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest bearing loans and borrowing that define capital structure requirements. The company has compiled with these covenants and there have been no breaches in the financial covenants of any interest - bearing loans and borrowings.

No changes were made in the objectives, policies or processes for managing capital during the year ended 31^stMarch 2018 and 31^st March, 2017.

Note No. 3

On First Time adoption of IND AS Explanation of transition to Ind AS

These financial statements for the year ended 31^stMarch 2018. are the first financial statements, the company has prepared in accordance with Ind AS.

Accordingly, the Company has prepared financial statements; the company has prepared financial statements which comply with Ind As applicable for year ended 31^st March 2018, together with the comparative figures for the year ended 31^st March 2017, as described in the summary of significant accounting policies.

In preparing these financial statements, the company’s opening balance sheet was prepared as at 1^st April 2016, i.e the date of transition to Ind AS

This note explains the principal adjustments made by the company and an explanation on how the transition from the previous GAAP to Ind AS has affected its financial statements, including the balance sheet as at 1^st April 2016, and the financial statements for the year ended 31^st March 2017.

Set our below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from the previous GAAP to Ind AS.

Deemed Cost

a) The Company has elected to continue with carrying value of all property, plant and equipment under the previous GAAP as deemed cost as at the transition date i.e. 1^st April 2016. Under the previous GAAP, property, plant and equipment were stated at their original cost (net of accumulated depreciation, amortization and impairment), if any.

b) The Company has elected to continue with the carrying value of Capital work in progress as recognized under the previous GAAP as deemed cost as at the transition date.

c) The Company has elected to continue with the carrying value for intangible assets (computer software) as recognized under the previous GAAP as deemed cost as at the transition date, unde

the previous GAAP, computer software was stated at its original cost, net of accumulated amortization.

Estimates

The estimates as at 1^st April 2016 and as at 31^st March 2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies)

Classification and Measurement of Financial Assets

Ind AS 101 requires the de-recognition requirements of Ind AS 109 to be applied prospectively to transactions occurring on or after the date of transition.

Therefore, the company has not recognized financial assets and liabilities under Ind AS which were derecognized under the previous GAAP as a result of a transaction that occurred before the date of transition.

Footnotes to the reconciliation of equity as at 1^st April 2016 and 31^st March, 2017 and Statement of profit and Loss for the year ended 31^st March 2017

a) Property plant and equipment

Under Ind AS the Company has elected to opt for cost model with respect to property, plant and equipments, capital work in progress and computer software.

b) Provision for expected credit loss on trade receivables

The Company has made impairment for trade receivable as per simplified approach based on the life time expected credit loss model. No impact on the transition date is recognized in opening reserves and changes thereafter in Profit and Loss Account.

c) Defined benefit Liabilities

As per Ind AS 19 - Employee Benefits, actuarial losses of Rs.-0.78 lakhs are recognized in other comprehensive income as compared to being recognized in the statement of profit and loss under previous GAAP. Consequently the tax effect of Rs.-0.26 lakhs has also been recognized in other comprehensive income under Ind As instead of profit and loss.

d) Deferred tax

Previous GAAP required differed tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the year Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which were not required under the previous GAAP. Moreover, carry forward of unused tax credits are to be treated as deferred tax assets which was earlier considered as other non- current non- financial assets.

In addition, the various transitional adjustments lead to temporary differences and consequently deferred tax adjustments have been recognized in correlation to the underlying transaction in retained earnings.

The net impact on deferred tax Assets has increased by Rs.0.31 lakhs as on transition date.

e) Interest Income

The previous GAAP required the recognition of revenue from interest on time proportion basis. However, Ind As requires interest on financial assets to be recognized using the effective interest rate method.

f) Cash Flow Statement

The transition from the previous GAAP to Ind AS has not material impact on Cash Flow Statement.

g) Total Comprehensive Income and Other Comprehensive Income

Under the previous GAAP, the Company did not present total comprehensive income and other comprehensive income. Hence, it has reconciled previous GAAP profit to profit as per Ind AS, Further, the previous GAAP profit is reconciled to other comprehensive income and total comprehensive income as per Ind AS.

Note:- Fair Value Hierarchy

The fair value of the financial assets and financial liabilities are included at the amount at which the instrument could not be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value of cash and cash equivalent, bank balances other than cash and cash equivalents, trade and other receivables, loans and other current financial assets, short term borrowing from banks and financial institution, trade and other payables and other current financial liabilities approximate their carrying amounts due to the short term maturities of these instruments.

Note: 5

The Previous year figure as on date of transition have been reworked, regrouped, rearranged and reclassified wherever necessary amounts and other disclosures for the preceding year including figures as at the date of transition are included as an integral part of the current year financial statements and are to be read in relation to the amounts and other disclosers relating to the current year.