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NOTES TO ACCOUNTS

Zota Healthcare Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 471.69 Cr. P/BV 6.84 Book Value (₹) 28.06
52 Week High/Low (₹) 237/175 FV/ML 10/1 P/E(X) 85.02
Bookclosure 26/07/2019 EPS (₹) 2.26 Div Yield (%) 0.52
Year End :2018-03 

CORPORATE INFORMATION:

Zota Health Care Ltd. is a company domiciled in India and Incorporated under the provisions of the Companies Act, 1956. The company is engaged in the Manufacturing & Trading in Pharmaceutical Products. The company caters to both domestic and international markets.

1. Recent Accounting Pronouncements

Standards issued but not yet effective:

In March 2018, the Ministry of Corporate Affairs issued certain amendments to Ind AS. These amendments maintain convergence with IFRS by incorporating amendments issued by InternationalAccounting Standards Board (IASB) into Ind AS. The amendments relate to the following standards:

-Ind AS 40, Investment Property

-Ind AS 21, The Effect of Changes in Foreign Exchange Rates -Ind AS 12, Income Taxes

-Ind AS 28, Investments in Associates and Joint Ventures -Ind AS 112, Disclosure of Interests in Other Entities

2. Significant Judgements and Estimates

The preparation of the Company’s financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the reported amount of assets, liabilities, revenue, expenses, and the accompanying disclosures and the disclosures 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 future periods. The estimates and associates assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances existing when financial statements were prepared. These estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates is recognised in the year in which the estimates are revised and in any future year affected.

Estimates and Assumptions

The key assumptions concerning the future and other key sources of estimation at the reporting date, which may cause 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.

The areas involving critical estimates and judgements are:

- Useful lives of Property, plant and equipment and intangibles [Refer Note No. 1.2 (xii.)]

- Measurement of defined benefit obligations [Refer Note No. 1.2 (xvi.)]

- Provision for inventories [Refer Note No. 1.2 (xi.)]

- Measurement and likelihood of occurrence of provisions and contingencies [Refer Note No. 1.2 (xiv.)]

- Impairment of trade receivables

- Deferred Taxes

3. First time adoption of Ind AS

These are the Company’s first financial statements prepared in accordance with Ind AS.

The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from April 1, 2017 with a transition date of April 1, 2016. These financial statements for the year ended March 31, 2018 are the first the Company has prepared under Ind AS. For all period’s upto and including the year ended 31st March, 2017, the Company prepared its financial statements in accordance with the previously applicable Indian GAAP (previous GAAP).

The adoption of Ind AS has been carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards. Ind AS 101 requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements be applied retrospectively and consistently for all financial years presented. Accordingly, the Company has prepared financial statements which comply with Ind AS for year ended 31st March 2018, together with the comparative information as at and for the year ended 31st March 2017. The Company’s opening Ind AS Balance Sheet has been prepared as at 1st April 2016, the date of transition to Ind AS.

In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act.

An explanation of how the transition from previous GAAP to Ind AS has affected the Company financial position, financial performance and cash flows is set out in the following tables and notes:

I. Ind AS 101 Exemptions applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions.

i. Deemed cost

Ind AS 101 permits a first time adopter to elect to continue with the carrying values for all of its Property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for decommissioning liabilities. This exemption is also used for intangible assets covered under Ind AS 38 ‘Intangible assets’.

Accordingly, the Company has opted to consider the carrying value for all of its Property, plant and equipment and Intangible assets as recognised in its previous GAAP financials as its deemed cost at the transition date.

ii. The cumulative translation difference at the date of transition is deemed to be zero being transferred to equity.

iii. Business combination

Ind AS 101, provides the option to apply Ind AS 103, Business Combinations prospectively from the transition date or from a specific date prior to the transition date. The company elects not to apply Ind AS 103 retrospectively, pertaining to business combinations occurred before transition date.

iv. Derecognition of financial assets and financial liabilities

Ind AS 101 permits a first time adopter to apply the derecognition requirements in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. Accordingly the company has opted to consider the measurement of financial assets and liabilities arisen before the date of transition of Ind AS as per previous GAAP.

v. Estimates

An entity’s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies).

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1, 2016, the date of transition to Ind AS and as of March 31, 2017.

II. Reconciliations between previous GAAP and Ind AS

III. Reconciliation of Statement of cash flows

There was no material differences between the Statement of Cash Flows presented under Ind AS and under previous GAAP.

IV. Note to Reconciliation

1. Proposed dividend

Under the previous GAAP, proposed dividends including dividend distribution tax (DDT) are recognised as a liability in the year to which they relate, irrespective of when they are declared. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS, a proposed dividend is recognised as a liability in the year in which it is declared by the Company (usually when approved by the shareholders in the general meeting).

Note: Under previous Indian GAAP, proposed dividend including dividend distribution tax, are recognised as liability in the period to which they relate, irrespective of when they are declared. Under Ind-AS, proposed dividend is recognised as liability in the period in which it is declared by the Company, usually when approved by the shareholders in a general meeting.

During the year, Company has paid dividend at the rate of 20% i.e. Rs. 2/- per share to the shareholders and the same has been paid to the shareholders who held the shares of the Company as on the record date. For the aforesaid dividend, the Company had fixed book closure date from 1 st August, 2017 to 5th August, 2018 and also fixed record date as 5th August, 2017. As per the record date, the Company had paid all dividend amounts to the shareholders who held shares of the Company on 5th August, 2017. But for the purpose of payment of dividend, the Stock Exchange had fixed Ex-dividend date as 28th July, 2017 i.e. two days prior to the book closure date, that means shareholders who held shares of the Company on 28st July, 2017 were eligible for payment of dividend. Here, the Stock Exchange had not considered record date which was fixed by the Company and had fixed the Ex-dividend date by considering the book closure starting date. Because of this communication gap between various agencies including the Stock Exchange and RTA of the Company, the shareholders holding 84645 shares as on 31th July, 2017 had not received the dividend and actually they were eligible for the dividend as per the Ex-dividend date decided by the Stock Exchange. Hence, for the greater interest of the shareholders, the Company decided to pay the dividend to the shareholders who held shares of the Company as on 28th July, 2017 as well. Because of this, the Company has paid extra dividend of Rs. 169290/- and also paid Dividend Distribution Tax of Rs. 34,464/-. The Company had not made provisions for the aforesaid extra dividend so same has been reported as an extraordinary item in profit and loss account.

Investment in equity instrument made in Prime Co-Op Bank, the cost (i.e. carrying value) represents the best estimate of fair value considering the nature of the investment.

Fair value of financial assets/liabilities measured at amortised cost

The carrying amounts of trade receivables, cash and cash equivalents, other bank balances, current loans, other financial assets, trade payables, other financial liabilities are considered to be the same as their fair values, as they are current in nature.

4. All known liabilities have been provided for in the books of accounts for the year under report.

5. Balances of depositors, sundry debtors, creditors and loans and advances are subject to confirmation and reconciliation.

6. The quantity and value of closing stock is certified by the management as true and correct.

7. Previous year’s figures have been regrouped / recast wherever necessary to conform to current interim period’s presentation.

8. The company is not in position to identify the amount of balances due to small-scale industrial (SSI) undertakings in absence of sufficient information from suppliers regarding their status as SSI undertakings.

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