b) Rights, preferences and restrictions attached to shares Equity shares
The Company has one class of equity shares having a par value of INR 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
Nature and Purpose of Reserves
a) General Reserve
General reserve represents amount appropriated out of retained earnings pursuant to the earlier provisions of the Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013
b) Capital Reserve
These also include WMDC Capital Incentive and Seed Capital received by the company.
c) OCI
Includes FV Changes in Gratuity and Investment.
Axis Bank Car Loan availed by the company in relation to purchase of Motor Vehicle that has been hypothecated with the bank.
Term Loan facility from Axis Bank has been availed by the company towards renovation of Factory Building and Installation of Machinery against hypotecation of entire Fixed Assets created out of said Bank Finance. Hypothecation of entire Current Assets both present and future on First Pari Pasu basis with SBI
Term Loan secured by against EM of following properties on First Pari Pasu basis with SBI, NA Land Gat No. 231/2/B, 230/2/B/2, 233/2/B and 230/2/A/2 situated at Chincholi Kati, Tal Mohol, Dist. Solapur owned by Mr. Purushotham Eaga along-with Industrial Land and Building at Plot No. A-27 situated at Chincholi Industrial Area, Solapur Leased from MIDC by the Company and Industrial Land and Building situated at Gat No. 273 and 274 Akkalkot Road, MIDC Solapur Leased from MIDC by the Company.
Charge on NA Land Gat No. 231/2/B, 230/2/B/2, 233/2/B and 230/2/A/2 situated at Chincholi Kati, Tal Mohol, Dist. Solapur, are released by SBI during the year as per its letter IFBM/ AMT-II/ 2024-25/ SOL/ 1019 dated 13/02/2025.
Facilities from Axis Bank are secured against personal Guarantee of Purushotham Eaga to the extent of value of property.
Secured Cash Credit Loans:
First Pari Pasu Charge of entire current assets (present and future) of the company including raw material, stock in process, finished goods, receivables.
First Pari Pasu Charge on all Fixed Assets of the Company (Present and Future) including Plant and Machinery.
First Pari Pasu Mortgage Charge on NA Land Gat No. 231/2/B, 230/2/B/2, 233/2/B and 230/2/A/2 situated at Chincholi Kati, Tal Mohol, Dist. Solapur owned by Mr. Purushotham Eaga along-with Industrial Land and Building at Plot No. A-27 situated at Chincholi Industrial Area, Solapur Leased from MIDC by the company and Industrial Land and Building situated at Gat No. 273 and 274 Akkalkot Road, MIDC Solapur Leased from MIDc by the Company.
Hypothecation of entire Fixed Assets of the company created out of Axis Bank Finance both present and future on exclusive basis.
Inventories and Trade Recivables have been hypothecated under 1st Pari Pasu Charge with State Bank of India and Axis Bank against Cash Credit Limits of Rs. 1000 Lakhs and Rs. 500 Lakhs respectively, as sanctioned.
Current Maturities on Long Term Borrowings pertain Axis Bank Car Loan availed by the company in relation to purchase of Motor Vehicle that has been hypothecated with the bank and Term Loan facility availed by the company from Axis Bank towards renovation of Factory Building and Installation of Machinery against Hypothecation of entire Fixed Assets of the company created out of Axis Bank Finance both present and future on exclusive basis together with hypothecation of entire Current Assets both present and future on First Pari Pasu basis with SBI.
Ind AS 115 Revenue from Contract with Customers
The company recognises revenue when control over the promised goods or services is 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 has assessed and determined the above categories for disaggregation of revenue in addition to that provided under segment disclosure.
Note No. 35: Corporate Social Responsibility
The provisions of Section 135 of the Companies Act, 2013 are not applicable to the company during the Current Financial Year ended March 31, 2025 and previous financial year ended March 31, 2024.
The provisions related to ongoing projects have come into effect from 22nd January 2021, i.e., from FY 2020-21 onwards. The said provisions are prospective in effect and not applicable to projects of previous financial years. The Board of the company is free to decide the treatment of the unspent CSR amount of previous financial years prior to FY 2020-21. The Board has spent the amount during FY 23-24.
Defined Benefit Plan Gratuity
The Company has a defined benefit gratuity plan in India, governed by the Payment of Gratuity Act, 1972. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to gratuity payable on termination of his employment at the rate of fifteen days wages for every completed year of service or part thereof in excess of six months, based on the rate of wages last drawn by the employee concerned.
The gratuity plan is administered by a gratuity fund that is legally separated from the Company. The board of the gratuity fund is required by law to act in the best interests of the plan participants and is responsible for setting certain policies (e.g. investment, contribution and indexation policies) of the fund. The gratuity plan is fully funded by the Company. The funding requirements are based on the gratuity fund's actuarial measurement framework set out in the funding policies of the plan. During the year the company has obtained actuarial valuation for its gratuity benefit plan.
The above cashflows have been arrived at based on the demographic and financial assumptions.
j. Weighted average duration of the plan (based on discounted cash flows using mortality, withdrawal rate and interest rate) is 7.96 years (PY. 8.17 years).
k. The defined benefit plan exposes the Company to certain risks including actuarial risks, such as longevity risk, currency risk, interest rate risk, market (investment) risk, liability risks like asset -liability mismatch risk, discount rate risk, Future Salary Escalation and Inflation Risk and asset risk.
Leave Encashment Obligation
The company has not funded the liability as on 31st March 2025 towards leave encashment. The company has not obtained actuarial report for its Leave Encashment Liability as the leave encashment liability, being current, is due for payment within a period of one year from the end of the Financial Year.
a. The Company has identified business segments as reportable segments:
i. Bulk Drugs and Drugs Intermediates (API)
ii. Formulation
Revenue and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reporting segment have been allocated on the basis of associated revenue of the segment or manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as un-allocable expenses.
Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as un-allocable. Property, plant and equipment that are used interchangeably among segments are not allocated to reportable segments.
Segment Assets are measured in the same way as in the financial statements. Investments held by the company are not considered to be segment assets, but are considered as un-allocable assets.
d. There are 2 major customers (previous year 1 major customer) to whom more than 10% of the sales are effected and the total sales effected to such customers are INR 3463.33 Lakhs, (previous year INR 1453.74 lakhs)
Note No. 46 Additional Regulatory Information
a. The company has not revalued its Property, Plant and Equipment, Leasehold Land and Intangibles Assets during the year under consideration.
b. No Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013,) either severally or jointly with any other person by the company.
c. No proceeding has been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
d. The Company is not a declared wilful defaulter by any bank or financial institution or other lender in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India. The Company has been paying the due installment and interest charged by the bank on time and has neither defaulted on any installment payment nor on servicing of interest.
e. The Company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.
f. The company has no subsidiaries and accordingly the company is not required to comply with the provisions governing the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.
g. There is no such transaction which is not recorded in the books of accounts and 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).
h. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year
i. The Company does not have any charge that needs to be registered with Registrar of Companies beyond the statutory period. During the year, the company has additional charge registered with Registrar of Companies in relation to the Term Loan and Working Capital Facilities availed from Axis Bank Limited aggregating to Rs. 1700 Lakhs comprising of Cash Credit facility of Rs. 500 Lakhs and Term Loan Facility of Rs. 1200 Lakhs.
j. The company has availed and outstanding Cash Credit Facilities from State Bank of India and Axis Bank Ltd. The quarterly returns in the form of statement of Current Assets filed by the company with the said banks are in agreement with the books of account without any significant discrepancies that has impact on its drawing power limits. As per the consistent policies followed over the years, Trade Receivable have been reported gross of advances received and Trade Payable have been reported gross of advances and forex and provision adjustments.
k. 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;
l. 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
n. In respect of term loan from Axis Bank, interest due at end of November 2024 amounting to INR 1.11 lakh was paid on being charged by the bank on December 1, 2024 even though there was sufficient balance in CC account to recover such interest as at the end of November 2024. The company has not defaulted during the year in respect of any of the covenants in relation to loans borrowed by the company.
o. The company had made payment of INR 1.42 Lakhs in favour of JIGS Chemical Limited Ahmedabad in March 2020. The cheque was honoured for INR 4.42 Lakhs in favour of M D Abuzar. The management believes that the amount mentioned on the cheque was altered by the Courier / Third Person and was cleared for INR 4.42 Lakhs instead of the original drawn amount of INR 1.42 Lakhs. The company has been pursuing the matter legally both in the state of Gujrat and Maharashtra. During the preceding years, the management has accounted for expected loss allowance amounting to INR 4.42 Lakhs against such receivables outstanding in the books of account and carried forward the said loss allowance.
p. The company has filed legal case for recovery against four parties of trade receivables amounting to INR 216.15 Lakhs as on March 31, 2025. The hearing in the said cases are under process before various Honourable Courts. The management expects the entire recovery to be made in relation to the outstanding amount.
q. Information relating to other matters specified in revised Schedule III to the Act, is either nil or not applicable to the Company for the year/ period.
r. Previous year's figures are regrouped and rearranged whenever necessary.
s. The Company has not availed any Scheme of Arrangements that has been approved by Competent Authority in terms of Section 230 to 237 of the Companies Act, 2013.
Note No. 47 Financial InstrumentsFair values
Set out below, is a comparison by class of the carrying amounts and fair value of the Company's financial instruments, other than those
with carrying amounts that are reasonable approximations of fair values:
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes in to account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 116, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurements in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
The management assessed that cash and cash equivalents, other bank balances, trade receivables, trade payables, bank borrowings and other current liabilities are same as their carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
The fair values of non-current investments FVTOCI financial assets are derived from net asset value attributable to shares held by the company as extracted from the latest available financial statement of the investee company and has been categorized as Level 3 Financial Instrument.
The company has neither entered into any derivative transactions nor hedging transaction nor forward transaction relating to Foreign Currency or underlying asset.
Financial risk management objectives and policies
The Company's principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations and to provide guarantees to support its operations. The Company's principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and has not entered into derivative transaction.
The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees the management of these risks. Company's financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:
a. Financial risk management
The risk management policies are established to ensure timely identification and evaluation of risks, setting acceptable risk thresholds, identifying and mapping controls against these risks, monitor the risks and their limits, improve risk awareness and transparency. Risk management policies and systems are reviewed regularly to reflect changes in the market conditions and the Company's activities to provide reliable information to the Management and the Board to evaluate the adequacy of the risk management framework in relation to the risk faced by the Company.
The risk management policies aims to mitigate the following risks arising from the financial instruments:
• Market risk
• Credit risk; and
• Liquidity risk
b. 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 the market prices. The Company is exposed in the ordinary course of its business to risks related to changes in
• foreign currency exchange rates,
• commodity prices and
• interest rates
c. Foreign currency risk management
The Company's functional currency is Indian Rupees (INR). The Company undertakes transactions denominated in foreign currencies; consequently, exposure to exchange rate fluctuations arise. Volatility in exchange rates affects the Company's revenue from export markets and the costs of imports, primarily in relation to raw materials. The Company is exposed to exchange rate risk under its trade portfolio.
Movements in the exchange rate between the Rupee and any relevant foreign currency result's in change in the Company's overall trade position in Rupee terms.
In order to hedge exchange rate risk, the Company has a policy to hedge cash flows up to a specific tenure with its cash inflows. All hedging activities are carried out in accordance with the Company's internal risk management policies, as approved by the Board of Directors, and in accordance with the applicable regulations where the Company operates. The company has not entered into any derivative contracts during the year under consideration.
d. Commodity price risk:
The Company's revenue is exposed to the market risk of price fluctuations related to the sale of its products. Market forces generally determine prices for the products sold by the Company. These prices may be influenced by factors such as supply and demand, production costs (including the costs of raw material inputs) and global and regional economic conditions and growth. Adverse changes in any of these factors may reduce the revenue that the Company earns from the sale of its products. The Company primarily purchases its raw materials in the open market from third parties The Company is therefore subject to fluctuations in prices for the purchase of raw material inputs.
The Company aims to sell the products at prevailing market prices. Similarly the Company procures key raw materials based on prevailing market rates as the selling prices and the prices of input raw materials move in the same direction. The company has not entered into any derivative contracts during the year under consideration.
e. 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 is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. The floating interest rates are based on bank rate and are indirectly governed by RBI's monetary policy. The borrowings of the Company are in Indian Rupees. The company has maintained a mix of fixed interest rate borrowings and floating rate borrowings.
f. Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.
Company's credit risk arises principally from the trade receivables, loans, and investments in securities, cash & cash equivalents. Based on the historical data available with the management, the management has not encountered situations wherein the trade receivables have been considered as loss assets or credit has been impaired however, during the year some cases of defaults in payments and accordingly, the management after making an overall risk assessment has provided for expected credit loss provision.
Trade receivables
Customer credit risk is managed centrally by the Company and subject to established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits defined in accordance with the assessment.
Credit risk on receivables is also mitigated by securing the same against letters of credit of reputed nationalised and private sector banks. Trade receivables consist of a large number of customers spread across diverse industries and geographical areas with no significant concentration of credit risk. Only 2 customers during the year (PY 1 customers) account for 10.0% or more of revenue effected during the year under consideration. The outstanding trade receivables are regularly monitored, and appropriate action is taken for collection of overdue receivables. The history of trade receivables shows no major allowance for bad and doubtful debts but the marginal provision for doubtful debts (Expected Credit Loss) created this year . Also refer Note no. 10
Cash and cash equivalents and Other Bank Balances
Credit risks from balances with banks and financial institutions are managed in accordance with the Company policy. Also refer Note no. 11 and 12.
g. Liquidity risk management
Liquidity risk refers to the risk of financial distress or extraordinary high financing costs arising due to shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and requiring financing. The Company requires funds both for short term operational needs as well as for long term capital expenditure growth projects. The Company generates sufficient cash flow for operations, which together with the available cash and cash equivalents and short-term investments provide liquidity in the short-term and long-term.
The Company has established an appropriate liquidity risk management framework for the management of the Company's short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The following tables detail the Company's remaining contractual maturity for its financial liabilities with agreed repayment periods and its financial assets. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows.
The contractual maturity is based on the earliest date on which the Company may be required to pay:
The company has commissioned EasyERP software in February 2023 that facilities streamlining of business operations and processes that include procurement, inventory, logistics execution, product development, manufacturing and sales. The software has gone live on April 1, 2023.The EasyERP software does not allow edit or delete option at the financial transaction level and that the said audit trail (edit log) feature once enabled in the software cannot be disabled as effected at the application level of the software. ERP Database is not directly accessible to regular system users. The ERP has stringent access controls and security measures to restrict database access to vendor's authorized personnel who are responsbile for maintaining the integrity and security of the data. The software product owners have confirmed that there is no audit trail enabled for database level changes. However, the authorized personnel of vendor undergo rigorous authentication processes and adhere to strict protocols to ensure that database records remain confidential and tamper- proof.
The accompanying Notes are an integral part of the financial statements.