The rights, preferences and restrictions including restrictions on the distribution of dividends and the repayment of capital
The Company is having only one class of shares i.e. Equity carrying a nominal value of C2/- per share. Every holder of the equity share of the Company is entitled to one vote per share held. In the event of liquidation of the Company, the equity shareholders will be entitled to receive remaining assets of the Company after the distribution / repayment of all creditors. The distribution to the equity shareholders will be in proportion of the number of shares held by each shareholder.
The Company declares and pays dividend on the equity shares in Indian Rupees. Dividend proposed by the Board of Directors is subject to approval of the shareholders at the ensuing Annual General Meeting, except in case of interim dividend.
Nature and purpose of each Reserve
General Reserve : The reserve was created by transfer of a portion of the net profit.
Securities Premium : Securities premium is used to record the premium on issue of shares. The reserve can be utilised in accordance with provisions of the Companies Act, 2013.
Debenture Redemption Reserve : The company has created debenture redemption reserve out of the profits as prudent practice in accordance with erstwhile provision of Companies Act, 2013.
Other Comprehensive Income (OCI) : represents remeasurements of the defined benefits plan and fair value change of certain financial instruments.
On commissioning of various new manufacturing facilities or part thereof, an identified CWIP C473.56 Crores for the year ended on 31st March, 2024 are being written off as exceptional items against the provision of impairment already created in the financial year 2022-23 by charging off C1025.66 Crores (C676.87 Crores as written-off and C473.56 Crores as provision for impairment of assets net of deferred tax of C124.77 Crores) in the Statement of Profit and Loss and the equivalent amount was transferred from the General Reserve to the Statement of Profit and Loss and shown as exceptional items. There is no impact on the current period's profit.
B. Sikkim Insurance claim
Due to flash floods in river Teesta on 4th October, 2023, the company's manufacturing operations at Sikkim had got disrupted. The Company has fully resumed its manufacturing operations of the said facility in the month of February 2024. The Company is adequately insured. The Company estimated and lodged an claim of C56.06 Crores upto March 2024 . This claim comprises C5.92 Crores towards damages to Property, Plant and Equipment, C34.72 Crores for lost inventories and C15.42 Crores for restoration and other expenditure upto 31st March 2024. The Company has received, in the interim settlement, a reimbursement of C49.35 Crores upto 31st March, 2024 towards the Company's claim against above-referred items. Accordingly, the Company has recognised the losses, and restricted the claim receivable to the above extent as prudent practice and the same is disclosed as the exceptional item. The final accounting treatment will be done once the assessment of final loss is over and the claim in respect of final loss becomes receivable (Refer Note 9).
3. Disclosure required under Micro, Small and Medium Enterprise Development Act 2006
On the basis of confirmation obtained from the supplier who have registered themselves under the Micro, Small and Medium Enterprise Development Act, 2006 (MSMED Act, 2006), details are as below.
4. Segment Reporting
Segment information as required under Ind AS 108 i.e. Operating Segments is given in the Consolidated financial statements of the Company.
A description of methods used for sensitivity analysis and its limitations:
Sensitivity analysis is performed by varying single parameter while keeping all the other parameters unchanged.
Sensitivity analysis fails to focus on the interrelationship between underlying parameters. Hence, the results may
vary if two or more variables are changed simultaneously. The method used does not indicate anything about the
likelihood of change in any parameter and the extent of the change, if any.
Major risk to the plan
A. Actuarial Risk: It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons: Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in Obligation at a rate that is higher than expected. Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption then the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate. Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption then the Gratuity Benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.
B. Investment Risk: For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
C. Liquidity Risk: Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cash flows.
D. Market Risk: Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.
E. Legislative Risk: Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.
6. Provident Fund
The Company is liable for any shortfall, as per terms of the Provident Fund Trust deed, in the fund assets based on the Government specified rate of return. Such shortfall, if any, is recognised in the Statement of Profit and Loss as an expense in the year of incurring the same. There is no such shortfall during the year & in previous year. Contribution to Provident fund trust and ESIC C36.99 Crores (PY C31.09 Crores).
i The Company directly and through Alembic CSR Foundation, Implementing Agency has spent the amount referred in (b) above on CSR activities such as Healthcare including preventive healthcare, Education, Sanitation, Promotion and development of traditional arts and handicrafts, Adoption of Schools in tribal/backward areas, Rural development projects, Livelihood Enhancement, Reducing Inequality and Environmental Sustainability. if The Amount of C2.94 Crores transferred to Unspent CSR Account as per section 135(6) on 24th April, 2024. iii Refer Note 26 (7) for related party transactions.
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.
Level 3 inputs are unobservable inputs for the asset or liability.
(i) The Fair value of unquoted investment in Limited liability partnerships is arrived by CCM under market Approach and Net Asset Value ('NAV') method under Cost Approach by external valuation agency. The valuation is carried out based on provisional financial statement of ABCD Technologies LLP as at 31st December, 2023.
15. Financial Risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk
- Liquidity risk and
- Market risk
i) Credit risk:
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers, Deposit, Cash and cash equivalents and other receivables.
Trade receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer, demographics of the customer, default risk of the industry and country in which the customer operates. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company has used expected credit loss model for assessing the impairment loss.
Cash and cash equivalents
As at the year end, the Company held cash and cash equivalents of C20.13 Crores (PY C21.67 Crores). The cash and cash equivalents, other bank balances and derivatives are held with banks having good credit rating.
Other financial assets
Other financial assets are neither past over due nor impaired. ii) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligation as they fall due. The Company ensures that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions. The Company has sufficient unutilised fund and non fund based working capital credit limit duly sanctioned by various banks.
The company is rated by leading credit agency CRISIL, the rating "CRISIL A1 " and "AA /Stable"has been assigned for short term and long term facility respectively, indicating high degree of safety regarding timely payment and servicing of financial obligation.
iii) Market risk Currency Risk
The Company's foreign exchange risk arises from its foreign operations, foreign currency revenues and expenses. The Company uses foreign exchange option contracts, to mitigate the risk of changes in foreign currency exchange rates in respect of its business transactions and recognized assets and liabilities. The Company enters into foreign currency options contracts which are not intended for trading or speculative purposes but for mitigating currency risk.
Sensitivity analysis
For the year ended 31st March, 2024 every 5% weakening of Indian Rupee as compare to the respective major currencies for the above mentioned financial assets/liabilities would increase Company's profit and equity by approximately C47.49 Crores (PY C40.01 Crores). A 5% strengthening of the Indian Rupee as compare to the respective major currencies would lead to an equal but opposite effect.
Interest rate risk and Exposure to interest rate risk
The Company has loan facilities on floating interest rate, which exposes the company to risk of changes in interest rates.
For the year ended 31st March, 2024 every 50 basis point decrease in the floating interest rate component applicable to its borrowings would decrease the Company's interest cost by approximately C1.60 Crores (PY C2.68 Crores) on a yearly basis. A 50 basis point increase in floating interest rate would have led to an equal but opposite effect.
Commodity rate risk
The Company's operating activities involve purchase and sale of Active Pharmaceutical Ingredients (API), whose prices are exposed to the risk of fluctuation over short periods of time. Commodity price risk exposure is evaluated and managed through procurement and other related operating policies.
Other Risk
Since company has been significantly dealing in regulatory market, continuous compliance of all manufacturing facilities is pre requisite. Any adverse action by regulatory authority of the company's target market can adversely affect company's operation.
16. Capital Management
The Company's capital management objectives are:
* to ensure the Company's ability to continue as a going concern and
* to provide an adequate return to shareholders through optimisation of debts and equity balance.
The Company monitors capital on the basis of the carrying amount of debt less cash and cash equivalents as presented on the face of the financial statements. The Company's objective for capital management is to maintain an optimum overall financial structure.
Dividend on equity shares
The Board has recommended dividend on equity shares of C 11/- per equity share i.e. 550% for the financial year 202324 as against dividend of C 8/- per equity share i.e. 400% per equity share for financial year 2022-23.
18. Disaggregation of revenue
The Company is engaged in Pharmaceuticals business considering nature of products, revenue can be disaggregated as API business and Formulation business C1232.37 Crores (PY C1165.16 Crores) and C4641.69 Crores (PY C3983.84 Crores) respectively, and considering Geographical business, revenue can be disaggregated as in India C2444.4 Crores (PY C2312.2 Crores) and out side India C3429.66 Crores (PY C2836.8 Crores).
19. The Donation includes political contributions of C0.50 Crores (PY C9.70 Crores) through Electoral Bond and C4.00 Crores (PY C Nil) through Electoral Trust.
23. The Company has working capital borrowing from banks on the basis of security of current asset and quarterly returns filed by the Company with banks are in agreement with the books of account.
24. Other Statutory information
i The company does not have any Benami property, where any proceeding has been initiated or pending against the company for holding any Benami property.
ii The company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
iii The company have not traded or invested in Crypto currency or Virtual Currency during the period/year.
iv The company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
a) 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
b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
v The company have 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:
(a) 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
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
vi The company has no such transaction which is not recorded in the books of account 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.
vii The company holds all the title deeds of immovable properties in its name.
viii The company is not declared as wilful defaulter by any bank or financial Institution or other lender.
25. The previous year's figures have been regrouped / rearranged wherever necessary to make it comparable with the current year.
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