Amounts recognised in profit or loss

Provision for write-downs of inventories amounted to INR 2087.61 lakhs (March 31, 2022 - INR 2806.31 lakhs). These were recognised as an expense during the year and included in changes in value of inventories of work-inprogress, stock-in-trade and finished goods in statement of profit and loss.

Mode of valuation of inventories - refer note no. (k) of significant accounting policies.

C) Terms/rights attached to equity shares

The company has only one class of equity shares having a par value of ' 2/- per share. Each holder of equity shares is entitled to one vote per share. All equity shares of the Company rank pari passu in all respects including the right to dividend. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2023, the amount of ' 2.25 per share on the face value of ' 2/- is proposed to the equity shareholders of the Company (Previous year - ' 2.25 (including a special dividend of ' 0.75) per share on face value of ' 2/- declared and paid to the equity shareholders of the Company).

In the event of winding-up, subject to the rights of holders of shares issued upon special terms and conditions, the holders of equity shares shall be entitled to receive remaining assets, if any, in proportion to the number of shares held at the time of commencement of winding-up.

The description of the nature and purpose of each reserve within equity as follows :

Capital Reserve :

The Company recognises profit and loss on purchase, sale, issue or cancellation of the Company's own equity instruments to capital reserve.

Securities Premium :

Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provision of the Companies Act, 2013.

Employee Stock Options Outstanding Account :

The fair value of the equity-settled share based payment transactions with employees is recognised in standalone statement of profit and loss with corresponding credit to Employee Stock Options Outstanding Account.

General Reserve :

The General Reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to statement of profit and loss.

Retained Earnings :

Retained Earnings are the profits that the Company has earned till date less any transfer to general reserve, dividends or other distributions paid to shareholders.

(i) Information about individual provisions and significant estimates Sales Returns

When a customer has a right to return the product within a given period, the company recognises a provision for returns INR 1,728.18 lakhs as at March 31, 2023 (March 31, 2022 - INR 1,730.82 lakhs). This is measured on the previous history of sales return. Revenue is adjusted for the expected value of the returns and cost of sales & Inventory are adjusted for the value of the corresponding goods to be returned.

Critical judgements in calculating amounts

When a customer has a right to return the product within a given period, the company recognises a provision for sales return INR 1,728.18 lakhs as at March 31,2023 (March 31,2022 - INR 1,730.82 lakhs). This is measured on the previous history of sales return. Revenue is adjusted for the expected value of the returns and cost of sales & Inventory are adjusted for the value of the corresponding goods to be returned.

Performance obligations

a. Significant payment terms

In case of Domestic Sales, payment terms ranges from 7 days to 90 days based on geography and customers. In case of Export Sales these are either DP at sight, Document against acceptance - 30 days to 120 days, Letters of Credit - 30 days to 120 days.

b. Obligations for returns, refunds and similar obligations

In case of domestic sales, sales return may take place anytime before / after the expiry of goods.

Note 38 : Employee benefit obligations

As required by IND AS 19 'Employee benefits' the disclosures are as under :

(i) Defined benefit plans

a. Leave obligations

The leave obligations cover the company's liability for sick and earned leave.

The amount of the provision of INR 297.27 lakhs (March 31, 2022 - INR 427.36 lakhs) is presented as current, since the company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months and therefore provision is made on the basis of actuarial valuation obtained.

b. Post-employment obligations i. Gratuity

The company provides gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the company makes contributions to recognized funds in India. The company maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

(ii) Defined contribution plans

a. Provident Fund

The company also has certain defined contribution plans. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognized during the period towards defined contribution plan is INR 2,156.39 lakhs (March 31, 2022 - INR 1,985.34 lakhs).

b. Superannuation

The company contributed INR 115.13 lakhs (March 31, 2022 - INR 95.34 lakhs) to the superannuation plan. Thesamehasbeen recognized in theStatement of profitand loss account underthe head employee benefit expenses.

(iii) Balance sheet amounts - Gratuity

The amounts recognized in the balance sheet and the movements in the net defined benefit obligation over the year are as follows :

Fair value hierarchy

Level 1 :Hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and mutual funds that have quoted price. The mutual funds are valued using the closing NAV.

Level 2 : The fair value of financial instruments that are not traded in an active market (like forward contract) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3 : If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities etc. included in level 3.

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Note 41 : Capital Management (a) Risk management

The company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to our shareholders.

The capital structure of the company is based on management's judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. We consider the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

The Company's policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure.

The company monitors capital on the basis of the following gearing ratio : Net debt (total borrowings net of cash and cash equivalents) divided by Total Equity.

Note 42 : Segment Information

(a) Description of segments and principal activities

The company has only one reporting segment of its business i.e. Pharmaceutical, wherein the company's strategic steering committee, consisting of the chief executive officer, the chief financial officer and the manager for corporate planning, examines the group's performance both from a product and geographic perspective.

The steering committee primarily uses a measure of adjusted earnings before other income, finance cost, tax, depreciation and amortisation (EBITDA, see below) to assess the performance of the operating segments. However, the steering committee also receives information about the segments' revenue and assets on a monthly basis

(b) Adjusted EBITDA

Adjusted EBITDA excludes discontinued operations and the effects of significant items of income and expenditure which may have an impact on the quality of earnings such as restructuring costs, impairments when the impairment is the result of an isolated, non-recurring event. It also excludes the effects of share-based payments and gains or losses on financial instruments.

Interest income and finance cost are not allocated to segments, as this type of activity is driven by the central treasury function, which manages the cash position of the company.

Note 49 : FINANCIAL RISK MANAGEMENT Financial risk management objectives and policies

The Company's financial risk management is an integral part of how to plan and execute its business strategies. The Company's financial risk management policy is set by the Audit Committee of the Board of Director.

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and loans and borrowings.

The Company manages market risk through a Finance department, which evaluates and exercises independent control over the entire process of market risk management. The Finance department recommend the risk management objectives and policies, which are approved by Senior Management and the Audit Committee. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures like foreign exchange forward contracts, borrowing strategies and ensuring compliance with market risk limits and policies.

Market Risk- Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. In order to optimize the Company's position with regards to interest income and interest expenses and to manage the interest rate risk, finance department performs a comprehensive corporate interest rate risk management policy by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.

According to the Company interest rate risk exposure is only for floating rate borrowings. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates.

Market Risk- Foreign currency risk.

The company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to USD, EURO, GBP and AUD. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company's functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimise the volatility of the INR cash flows of highly probable forecast transactions.

The company risk management policy is to hedge forecasted foreign currency sales for the subsequent 24 to 60 months. As per the risk management policy, foreign exchange forward contracts are taken to hedge forecasted sales.

The company also imports certain materials and Capital Goods which are denominated in USD, EURO, GBP, CHF,JPY,CNY which exposes the company to foreign currency risk to minimise the risk of imports, the company naturally hedges its imports.

The spot component of forward contracts is determined with reference to relevant spot market exchange rates. The differential between the contracted forward rate and the spot market exchange rate is defined as the forward points.

Credit risk arises from the possibility that the counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses financial reliability of customer and other counter parties, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of financial assets. Individual risk limits are set and periodically reviewed on the basis of such information.

The Company consider the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of default occurring on asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forward looking information such as:

• Actual or expected significant adverse changes in business,

• Actual or expected significant changes in the operating results of the counterparty,

• Financial or economic conditions that are expected to cause a significant change to the counterparty's ability to meet its obligations,

• Significant increase in credit risk on other financial instruments of the same counterparty,

• Significant changes in the value of the collateral supporting the obligation or in the quality of the third-party guarantees or credit enhancements.

Financial assets are written off when there is no reasonable expectations of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized as income in the statement of Profit and Loss.

The Company measures the expected credit loss of trade receivables and loan from individual customer based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitor rolling forecasts of the Company's liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows.

Legal Case -

a) MR's / Petitioners has filed a defamation suit against the company under Section 38 / Section 40 of the Specific Relief Act 1963 and the matter is pending before civil court of Jalandhar jurisdiction for ' 5 Lakhs each. Total Contingent liability against the suit is ' 20 Lakhs (Previous Year - ' 20 Lakhs)

b) Chartered of Demand (COD) case filed by Union FMRAI (Federation of Medical and Sales Representatives of India) for revision of field employee's salary which is pending since 2012 in Industrial Tribunal Mumbai in case bearing no. ITR No. 2 of 2012 FMRAI V/s Indoco Remedies Limited, Mumbai. Total Contingent liability against the suit is ' 30 Lakhs (Previous Year - ' 30 Lakhs)

* Income Tax demand comprises of

a) ' 5.98 lakhs (Previous year - ' 5.98 lakhs) appearing as TDS defaults on account of short Deduction / Short Payment & Interest thereon etc. of various assessment years

b) ' 1855.19 lakhs (Previous year - ' 1855.19 lakhs) demand issued by AO on account of Regular Assessment u/s 143(3) for AY 2018-19. The Company has preferred the appeal against the aggrieved demand order before CIT(A) which is yet to be heard.

c) ' 38.12 lakhs (Previous year - ' NIL) demand issued by AO on account of proceedings u/s 201(1) / 201(1A) of the Income tax Act for AY 2019-20. The Company has preferred the appeal against the aggrieved demand order before CIT(A) which is yet to be heard.

** Sales Tax demand comprises of

(I) Telangana Sales Tax:-

a) ' 189.81 lakhs (Previous year - ' 189.81 lakhs) demand pertaining to classification dispute under Andhra Pradesh VAT Act for the period April 2005 to March 2009. The Company has filed an appeal before High Court which is yet to be heard.

b) ' 619.19 lakhs (Previous year - ' 619.19 lakhs) demand (including penalty) pertaining to classification dispute under Andhra Pradesh VAT Act for the period April 2009 to December 2013. The Company has filed an appeal before Telangana VAT Appellate Tribunal Hyderabad which is yet to be heard.

c) ' 96.86 lakhs (Previous year - ' 96.86 lakhs) is penalty imposed on demand of April 09 to October 12 under Andhra Pradesh VAT Act for classification dispute. The Company has filed an appeal before Appellate Deputy Commissioner (CT), Hyderabad Rural Division which is yet to be heard.

d) ' 59.88 lakhs (Previous year - ' 59.88 lakhs) demand pertaining to classification dispute under Telangana VAT Act for the period Jan 14 to June 2017. The Company has filed an appeal before Appellate Deputy Commissioner (CT), Hyderabad Rural Division which is yet to be heard.

e) ' 5.99 lakhs (Previous year - ' 5.99 lakhs) is penalty imposed on demand pertaining to classification dispute under Telangana VAT Act for the period Jan 14 to June 2017. The Company has filed an appeal before Deputy Commissioner (CT), Saroornagar Division, Hyd which is yet to be heard.

The Company have applied for One Time Settlement (OTS) Scheme 2022 as per the Amnesty Scheme declared by Government of Telangana for the above mentioned disputed Commercial Taxes pending at various forums. As per the Scheme, 50% of balance outstanding taxes will be collected while remaining 50% of demand will be waive off. The Interest & penalty shall be waive off for the dealers availing the scheme. No refunds shall be given under the scheme. As per the Letter of Acceptance of Application of OTS in Form 4, We have paid settlement amount during FY 2022-23. The Final Settlement Order is awaited as on date.

(II) Vijayawada A.P.Sales Tax :-

f) ' 12.83 lakhs (Previous year - ' 12.83 lakhs) in respect of order from Asst. Commissioner (CT) Audit, Vijayawada for classification dispute for the period June 14 to March 2016. The Company has preferred an appeal before Appellate Deputy Commissioner (CT), Vijayawada.

g) ' 3.21 lakhs (Previous year - ' 3.21 lakhs) is penalty imposed on demand pertaining to order from Asst. Commissioner (CT) Audit, Vijayawada for classification dispute for the period June 14 to March 2016. The Company has preferred an appeal before Appellate Deputy Commissioner (CT), Vijayawada.

(III) Goa Sales Tax :-

h) ' 46.32 lakhs (Previous year - ' 46.32 lakhs) as the amount of demand (including penalty) raised by sales tax officer for Financial Year 2007-08, 2009-10 and 2013-14 on account of input credit of entry tax. The Company has filed appeal before Asst. Commissioner of Commercial Taxes, who has set aside the previous order and directed Assessing Officer for Re-assessment.

*** Excise tax demand comprises of

a) Company appeal is pending before CESTAT for wrong availment of notification on exempted goods ' 0.66 lakhs (Previous year - ' 0.66 lakhs).

b) Appeal pending before Divisional Dy. Commissioner, Boisar for classification dispute ' 5.04 lakhs (Previous year - ' 5.04 lakhs).

c) CENVAT credit on input service ' NIL lakhs (Previous year - ' NIL lakhs), appeal pending before CESTAT, Mumbai.

d) Company appeal is pending before Divisional Dy. Commissioner, Mumbai for wrong availment of CENVAT credit ' 0.79 lakhs (Previous year - ' 0.79 lakhs).

e) Central excise department is in appeal before Supreme Court for Differential duty on intermixture of vitamins / minerals amounting to ' 2.91 lakhs (Previous year - ' 2.91 lakhs).

f) CENVAT credit on input service ' 494.42 lakhs (Previous year - ' 494.42 lakhs), appeal pending before CESTAT, Mumbai.

g) Company appeal is pending before CESTAT for CENVAT credit availment on physician sample amounting to ' 0.20 lakhs (Previous year - ' 0.20 lakhs).

h) Central excise department is in appeal at Supreme Court for valuation of physician sample ' 11.20 lakhs (Previous year - ' 11.20 lakhs).

i) ' 139.78 lakhs (Previous year - ' 139.78 lakhs) pending before CESTAT, Mumbai for Exempted product-Allopurinol Value Based Duty Reversal.

a) The Company received Order under section 73 from Office of the Dy. Com. of State Tax for tax period 2017-18 of ' 4.67 lakhs (Previous year - ' 4.99 lakhs). The Company has preferred the appeal against the aggrieved demand order before Jt. Comm. of State Tax (Appeal) which is yet to be heard.

b) The Company received Order under section 73 from Office of the Additional CT & GST Officer and Cuttack - I City Circle, Cuttack, Odisha for tax period 2020-21 of ' 2.03 lakhs (Previous year - ' NIL). The Company has preferred appeal against the aggrieved demand order before Jt. Comm. of State Tax (Appeal) which is yet to be heard.

The above information regarding Micro Enterprises and small Enterprises has been determined on the basis of information available with the Company. No interest has been accrued on delayed payments, if any.

Note No: 55

Previous year's figures have been regrouped and reclassified wherever necessary.