Nature and purpose of reserves:
Security premium: This is the premium received on issue of equity shares and will be utilised as per the applicable provisions of the Act.
General reserves: This is the amount transferred from retained earnings and will be utilised as per the applicable provisions of the Act.
Retained earnings: This comprises of net accumulated profit of the Company after declaration of dividend.
Other comprehensive income: This comprises of actuarial gain/(loss) [net of taxes] at the end of the reporting period.
Share based payment reserve: This comprises of share options granted by the company to its employees under its share option plan. Refer Note 15 (e) for further details
(a) Terms and conditions of secured rupee term loans and
nature of security
for FY 2022-23
1. i) The working capital term loan from Axis Bank amounting to ' 15.27 Million as at March 31, 2023 (Sanctioned limit of ' 23.90 Million in the FY 202021) under emergency Credit Line Guarantee Scheme is secured by extension of charge (second charge) on existing primary and collateral security and guaranteed by NCGTC.
ii) The above mentioned working capital term loan carries interest at the rate of 9.25% fixed {Prev Year 1 Year MCLR 0.10% i.e., 7.45%} and is repayable in 36 equal monthly installments commencing from March, 2022 (as per sanction letter)
for FY 2021-22
1. i) The working capital term loan from Axis Bank amounting to ' 23.24 Million as at March 31, 2022 (Sanctioned limit of ' 23.90 Million in the FY 202021) under emergency Credit Line Guarantee Scheme is secured by extension of charge (second charge) on existing primary and collateral security and guaranteed by NCGTC.
ii) The above mentioned working capital term loan carries interest at the rate of 1 Year MCLR 0.10% i.e., 7.45% {Prev Year 4% (Repo rate) 3.5% i.e., 7.5% p.a} and is repayable in 36 equal monthly installments commencing from March, 2022 (as per sanction letter)
(b) Terms and conditions of secured foreign currency term
loans and nature of security
1. The foreign currency term loan outstanding from Axis Bank taken for General Capex amounting to ' 55.27 Million (equivalent to USD 0.67222 Million) as at March 31, 2023 (Sanctioned limit of ' 75.00 Million in FY 2020-21 and subsequently converted into FCTL of USD 1.034 Million) is secured by way of first charge to bank on assets created out of Term Loan. This loan is also secured by Second Charge on Current Assets (both present and future) of the company at pari passu basis with HDFC Bank Ltd. The loan is covered by collateral security by way of equitable mortgage of property bearing Plot Nos.141/2 & 142, IDA, Phase -II, Cherlapally, Hyderabad - 500 083, Telangana.
The above mentioned foreign currency term loan carries interest at 12 Months SOFR 275 bps plus 1% per annum (mark up fee upfront) and repayable in 20 equal quarterly installments commencing from March 2022 (as per sanctioned letter).
2. The foreign currency term loan outstanding from Axis Bank taken for E& E Project amounting to ' 74.03 Million (equivalent to USD 0.9004 Million) as at March 31, 2023 (sanctioned limit of ' 150.00 Million in FY 2020-21 and subsequently converted into FCTL of USD
I. 177522 Million) is secured by way of first charge to bank on assets created out of Term Loan. This loan is also secured by Second Charge on Current Assets (both present and future) of the company at pari passu basis with HDFC Bank Ltd. The loan is covered by collateral security by way of equitable mortgage of property bearing Plot Nos.141/2 & 142, IDA, Phase -
II, Cherlapally, Hyderabad - 500 083, Telangana.
The above mentioned foreign currency term loan carries interest at SOFR 275 bps 1.00% per annum(markup fee upfront) and repayable in 20 quarterly installments commencing from March, 2022 (as per sanction letter).
(c) Secured rupee term loans from NBFC:
1. i) The rupee term loan from Cisco Systems Capital India Private Limited amounting to ' Nil as at March 31, 2023 (Sanctioned limit ' 19.24 Million in FY 201920) is secured by way of exclusive charge on assets acquired from such loan by way of hypothecation.
ii) The above mentioned rupee term loan carries an interest at the rate of 5.00% as at March 31, 2023 and is repayable in 12 Quarterly installments commencing from October, 2019.
(d) Unsecured loans from NBFC:
1. The rupee term loan from Cisco Systems Capital India Private Limited amounting to ' 1.53 Million as at March 31, 2023 (Sanctioned limit of ' 8.67 Million in FY 2019-20) carries at NIL interest and is repayable in 20 quarterly installments commencing from September, 2019.
2) The rupee term loan from Cisco Systems Capital India Private Limited amounting to ' 2.35 Million as at March 31, 2023 (Sanctioned limit of ' 9.69 Million in FY 2019-20) carries at NIL interest and is repayable in 20 quarterly installments commencing from January, 2020.
3) The rupee term loan from Cisco Systems Capital India Private Limited amounting to ' 1.42 Million as at March, 31, 2023 (sanctioned limit of ' 4.54 Million in FY 2020-21) carries an interest at the rate of 5.00% as at March 31, 2023 and is repayable in 20 quarterly installments commencing from September, 2019.
(f) Details of working capital limits from banks:
1. The working capital facility from Axis bank amounting ' Nil as at March 31, 2023 (sanctioned limit ' 150 mn) carries an interest of 1 Year MCLR plus spread of 0.80% and is secured by way of first paripassu charge on entire current assets of the company (both present and future) along with HDFC Bank ltd.
2. The working capital facility from HDFC bank amounting ' Nil as at March 31, 2023 (sanctioned limit ' 150 mn) carries an interest of 3 Months T Bill plus spread of 2.67% and is secured by way of first paripassu charge on entire current assets of the company (both present and future) along with Axis bank ltd.
3. First paripassu charge to HDFC bank on Industrial land and building situated at Plot No 141/2 and 142, IDA, Phase -II, Cherlapally, Hyderabad- 500051 as collateral security.
(g) There were no defaults as on balance sheet date In repayment of above borrowings and interest thereon (Period and amount)
(h) The company has used the borrowings from Banks and Financial Institutions for the specific purpose for which it was taken at the Balance sheet date.
(i) For the borrowings from Banks on the basis of security of current assets, the quarterly returns or statements filed by the company with Banks are in agreement with the books of account.
(j) Company is not a declared willful defaulter by any Bank or Financial Institution or other lender.
(k) There are no charges or satisfaction which are yet to be registered with ROC beyond the statutory period.
*i) Waiver of duty of ' 45.19 millions on import of plant and equipment under Export Promotion Capital Goods (EPCG) Scheme relating to duty waiver received in previous years. There are no contingencies attached to these grants except the fulfilment of export obligations. As these grants are relating to Plant and equipments, the same has been capitalised and amortised over the useful life of respective assets.
**ii) The company was granted an in-principle approval of a grant-in-aid of ' 7.1 million during FY 2017-18 by the biotechnology industry research assistance council for project entitled towards preclinical evaluation of clinical grade vaccine. Against this sanctioned amount, so far an amount of ' 2.13 millions was received. Since the terms and conditions are fulfilled during the current year, company has recognized grant income on receipt of the balance grant amount.
The Company's principal financial liabilities comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations. The Company's principal financial assets include loans, trade and other receivables, cash and cash equivalents and other bank balances that derive directly from its operations. The Company also holds investment in its subsidiary.
The carrying amounts of trade receivables, trade payables and cash and bank balances are considered to be the same as their fair values, due to their short-term nature. The difference between carrying amounts and fair values of bank deposits, other financial assets, other financial liabilities and borrowings subsequently measured at amortised cost is not significant in each of the years presented. For all other amortised cost instruments, carrying value represents the best estimate of fair value. For financial assets measured at fair values, the carrying amounts are equal to the fair values.
33 Financial risk management objectives and policies
The Company's activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company's primary risk management focus is to minimize potential adverse effects of market risk on its financial performance. The Company's risk management assessment and policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company's activities. The Board of Directors and the Audit Committee is responsible for overseeing the Company's risk assessment and management policies and processes. It is the Company's policy that no trading in derivatives for speculative purposes may be undertaken.
(i) Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Company's income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long-term debt. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
a) 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 Company's operating activities (when revenue or expense is denominated in a foreign currency) in United States Dollar ('USD'), Euro ('EUR'), Great Britain Pound ('GBP'), Malaysian Ringgit ('MYR'), Swiss Franc ('SF'),Singapore dollar ('SGD') Japan Yen ('JY') , Canadian dollar ('CAD') and borrowings in USD.
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 fixed rate borrowings are carried at amortised cost and hence are not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates. Further, the Company's investments in deposits is with banks and electricity authorities and therefore do not expose the Company to significant interest rates risk. The company's main interest rate risk arises from borrowings with variable rates, which expose it to cash flow interest rate risk.
The Company does not have any investments which are classified in the balance sheet either as fair value through OCI or at fair value through profit or loss. Hence, the Company is not exposed to any price risk. ii) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
Trade and other receivables
Customer credit risk is managed by each business unit subject to the Company's established policy, procedures and control relating to customer credit risk management. The credit quality of a customer is assessed based on an extensive credit rating scorecard, internal evaluation and individual credit limits. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
Collateral held as security and other credit enhancements
The Company does not collect any collateral or other credit enhancements to cover its credit risks associated with its financial assets.
Financial assets that are neither past due nor impaired
Other than trade receivables, the Company has no significant class of financial assets that is past due but not impaired.
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.
Management monitors rolling forecasts of the Company's liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected cash flows. This is generally carried out by the Company in accordance with practice and limits set by the management. In addition, the Company's liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
iv) Excessive risk concentration
Concentrations arise when a number of counter parties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company's performance to developments affecting a particular industry.
In order to avoid excessive concentrations of risk, the Company's policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly. Selective hedging is used within the Company to manage risk concentrations at both the relationship and industry levels.
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34 Contingent liabilities & Commitments (to the extent not provided for)
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Particulars
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As at
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As at
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31 March 2023
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31 March 2022
|
|
A. Contingent liabilities
Claims against the Company not acknowledged as debts in respect of:
Employees provident fund demand not provided for (pending before the Employees' Provident Funds Appellate Tribunal)
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8.70
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8.70
|
| |
8.70
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8.70
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|
Bank Guarantees excluding financial guarantees
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16.18
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15.70
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Corporate Guarantees given to Subsidary Companies
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9.00
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-
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Note:
(a) Based on the Supreme Court Judgment dated February 28, 2019, the Company was required to reassess the components to be included in the basic salary for the purposes of deduction of Provident Fund. On the basis of legal advice, the management has determined that there is no impact of the aforesaid ruling on the standalone financial statements of the Company.
(b) The Indian Parliament has approved the Code on Social Security,2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security,2020 on November 13, 2020, and has invited suggestions from stakeholders which are unconsideration by the Ministry. The company will assess the impact and and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
(c) Bank Guarantees are issued to meet certain business obligations towards government agencies and certain customers.
(d) The Company has given corporate guarantee of Rs 9.00 million to EMTAC Laboratories Pvt Ltd to the bank for the purpose of working capital sanction during the year.
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B. Commitments
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Particulars
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As at
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As at
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|
31 March 2023
|
31 March 2022
|
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Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)
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70.27
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18.21
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C. Impact of pending Litigations:
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|
|
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There are no material pending litigations against the company, which will impact its financial position.
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35 Leases
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The Company's significant leasing arrangements are in respect of operating leases for premises. The leasing arrangements are generally cancellable leases which range between 1 years to 5 years and are usually renewable by mutual consent on agreed terms.
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Particulars
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For the year ended
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For the year ended
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31 March 2023
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31 March 2022
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Total rental expense relating to operating lease
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27.40
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22.51
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- Non-cancellable
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-
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-
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- Cancellable
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27.40
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22.51
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The sensitivity analyses above have been determined based on a method that extrapolates the impact on defined benefit
obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
Risk exposure
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed
below:
(a) Asset volatility: The plan liabilities are calculated using a discount rate set with reference to current investment patterns in the economy; if plan assets underperform this yield, this will create a deficit. The plan asset investments are subject to interest rate risk. The Company has a risk management strategy where the aggregate amount of risk exposure is maintained at a fixed range. Any deviations from the range are corrected by rebalancing the investments. The Company intends to maintain the investment pattern in the continuing years.
(b) Changes in bond yields: A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans' bond holdings.
(c) Life expectancy: The defined benefit obligation is to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans' liabilities. This is particularly significant where inflationary increases result in higher sensitivity to changes in life expectancy.
The weighted average duration of the defined benefit plan obligation at the end of the reporting period is 3 years (31 March 2022: 3 years).
Expected Contribution to the plan for the next annual period ' 92.96 millions.
(ii) The Company provides for accumulation of compensated absences by certain categories of its employees. These employees can carry forward a portion of their unutilised compensated absences and utilise/encash them in future periods as per the Company's policy. The Company records a liability for compensated absences in the period in which the employee renders the services that increases this entitlement.
40 Segment Reporting
The Managing Director of the company has been identified as the Chief Operating Decision Maker (CODM) as required by Ind AS 108 Operating Segments. The Company is in the business of providing contract research and testing services. The Managing Director reviews the operations of the Company as one operating segment taking into account the nature of the business, the organization structure, internal reporting structure and risk and rewards. Hence no separate segment information has been furnished herewith.
41 Capital management
The Company's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
* As at 31 March 2023 borrowings are lower than the Cash and Cash equivalents and Bank Deposits resulting in a negative net debt.
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 borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period. Further there were no changes were made in the objectives, policies or processes for managing capital for the year ended March 31, 2023.
c) The Company has given corporate guarantee of ' 9.00 million to EMTAC Laboratories Pvt Ltd to the bank for the purpose of working capital sanction during the year (Previous year - Nil)
d) The Company has not provided any securities during the year (Previous year - Nil)
43 Pursuant to the notification issued by the central government under Foreign Trade Policy 2015-20 vide Notification no 29 dated September 23, 2021 the admissible rate on net foreign earnings has been revised to 5% from 7%. Accordingly, an impact of ' 12.24 million is recognised as an exceptional item during the year ended March 31, 2022.
44 The company has entered into a Public Private Partnership (PPP) agreement with Food Safety and Standards Authority of India (FSSAI) on June 29, 2021 to setup, operate and transfer (SOT) a National food Testing Laboratory (NFL) in JNPT, Mumbai. In accordance with the provisions of Ind AS 115, this arrangement has been considered as a "Service Concessionaire Arrangement" (SCA) and accordingly, revenue and costs are allocatable between those relating to lab setup services and those relating to operation and maintenance services. Further, the Company has acquired the right to charge the customer for the services to be rendered which has been assessed as an intangible asset.
Consequently, the amount of revenues from operations and lab setup expenses includes ' 19.86 million for year ended March 31, 2023 and ' 138.43 million for the year ended March 31, 2022, respectively representing the revenues relating to lab setup services provided under SCA, the costs of fulfilling the contract and the right to charge the customer for the services to be rendered, respectively.
45 Other Statutory Information
(i) The company has no transactions with companies struck off under Sec. 248 of the companies Act, 2013 or Sec. 560 of the Companies Act, 1956.
(ii) 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
(iii) The company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(iv) No Proceeding has been initiated or pending against the company under the Benami Transactions (Prohibition) Act, 1988 and the rules made thereunder.
(v) During the year, no scheme of arrangements has been approved by the competent authority in terms of Sec. 230 to 237 of the Act, in which the company is a party.
(vi) The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies) including foreign entities (intermediaries) with the understanding (whether recorded in writing or otherwise) that the intermediary shall (i) 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 (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
vii) 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 (i) 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 (ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
viii) The company has complied with the number of layers prescribed under Clause 87 of Sec. 2 of the Act read with the Companies (Restriction on number of layers) Rules 2017.
(ix) The company has not granted loans or advances in the nature of loans to the promoters, directors or KMP's and the related parties as defined in the companies act, 2013 either severally or jointly with any other person that are repayable on demand or without specifying terms or period of repayment.
46 Previous year figures have been regrouped/reclassified wherever necessary to correspond with current year classification and disclosure.
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