Aarti Drugs Ltd.
You can view the entire text of Notes to accounts of the company for the latest year
ISIN No INE767A01016 52Wk High (Rs.) 785 BV (Rs.) 193.12 FV (Rs.) 10.00
Bookclosure 10/08/2018 52Wk Low (Rs.) 491 EPS (Rs.) 34.90 P/E (X) 16.54
Mkt Cap. (Rs. Cr.) 1,361.63 P/BV (X) 2.99 Div Yield (%) 0.17 Mkt Lot 1
2018-03

Note No. 10.1 :Rights attached to equity shares

The Company has only one class of equity shares with voting rights having a par value of ' 10/- per share. The Company declares and pays dividends in Indian Rupees. Any interim dividend paid is recognized on the approval by Board of Directors.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the numbers of equity shares held by shareholders.

Note No. 10.3 : Notes on Issued, Subscribed and Paid up Equity Share Capital

(a) During the Fiancial Year 2017-18 , the Company has completed buyback of 2,75,000/- equity shaes of face value Rs, 10/- each at a price of Rs, 875/- per share on 14th March, 2018. The number of shares post buyback stands reduced to 2,35,82,100 of Rs, 10/- each. Accordingly the paid up capital also stands reduced to Rs, 2,358.21 lakhs.

(b) During the Fiancial Year 2016-17, the Company has completed buyback of 3,60,000/- equity shaes of face value Rs, 10/- each at a price of Rs, 750/- per share on 26th December, 2016. The number of shares post buyback stands reduced to 2,38,57,100 of Rs, 10/- each. Accordingly the paid up capital also stands reduced to Rs, 2,385.71 lakhs.

(c) During the Fiancial Year 2014-15, 12,108,550 Equity shares of Rs, 10/- have been allotted as fully paid bonus shares held on record date 25th March, 2015.

1. There are no Micro and Small Enterprise, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March 2018. This information required to be disclosed under the Micro, Small and Medium Enterprise Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

*Capital expenditure includes expenditure on development of new product of Rs, 44.42/- Lakhs #Capital expenditure includes expenditure on development of new product of Rs, 972.99/- Lakhs

2. Segment Reporting (Ind- AS 108)

Ind AS 108 establishes standards for the way that Company reports information about operating segment and related disclosure about products and geographical areas.

I. BASIS FOR SEGMENTATION

The operations of the Company are limited to one segment i.e. Manufacturing of API (Active Pharmaceutical Ingredients). The products being sold under this segment are of similar nature and comprises of pharmaceutical intermediary products only. The Company’s Chief Operating Decision Maker (CODM) reviews the internal management reports prepared based on an aggregation of financial information adjustments etc. on a periodic basis.

*Post the applicability of GST with effect from 1st July, 2017, Sales are disclosed net of GST. Accordingly, the Gross Sales figures for the year ended 31stMarch, 2018 are not comparable with the sales figures depicted for the previous years.

3 RELATED PARTY DISCLOSURE UNDER (Ind-AS 24) A. Name and Relationship of the Related Parties:

(1) Subsidiary - Wholly owned Pinnacle Life Science Private Ltd.

(2) Individuals owning directly or indirectly, an interest in the voting power of the reporting enterprise that gives them control or significant influence over the enterprise and relatives of such individual.

- Individuals

Mr. Chandrakant V. Gogri Chairman Emeritus

Mr. Rajendra V. Gogri Non-Executive Director

- Relatives of Individuals

Mrs. Jaya C. Gogri Mr. Mirik R Gogri

Mrs. Dhanvanti V.Gogri Mr. Renil R. Gogri

Mrs. Aarti R. Gogri Mrs. Hetal Gogri Gala

(3) Key Management personnel along with their relatives have significant influence.

- Key Management Personel

Mr. Prakash M. Patil Chairman, Managing Director & Chief Executive Officer

Mr. Rashesh C. Gogri Managing Director

Mr. Harshit M. Savla Jt. Managing Director

Mr. Harit. P. Shah Whole-time Director

Mr. Uday M. Patil Whole-time Director

Mr. Adhish P. Patil Chief Financial Officer

Mr. Vibhav S. Ranade Company Secretary & Compliance Officer

- Relatives of Key Management Personel

Mrs. Priti P. Patil Mrs. Seema H. Savla

Mr. Arun M. Patil Ms. Bhoomi H. Savla

Dr. Vikas M. Patil Mr. Vishwa H. Savla

Mr. Sameer P. Shah Mrs. Jayashree H. Shah

Mrs. Arti T. Sankhe Mrs. Manisha R. Gogri

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; and

Level 2: Inputs other than the quoted prices included within Level 1 that are observed for the asset or liability, either directly or indirectly.

4 CAPITAL MANAGEMENT:

For the purpose of the Company’s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders. The primary objective of the Company’s capital management is to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. Net Debt is calculated as loans and borrowings less cash & marketable securities

5 FINANCIAL RISK MANAGEMENT:

The Company’s principal financial liabilities comprise 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, and cash and cash equivalents that derive directly from its operations. The Company is exposed to credit risk, market risk and liquidity risk. The Company’s senior management oversees the management of these risks.

Company has exposure to following risks arising from financial instruments:

- Credit risk

- Liquidity risk

- Market risk

I. Credit Risk

Credit risk is the risk that a counter party 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 mutual funds, foreign exchange transactions and other financial instruments.

Credit risk management.

To manage the credit risk, the Company follows a adequate credit control policy and also has an external credit insurance cover with ECGC policy .The requirement of assessing the impairment loss on trade receivables does not arise, since the collectability risk is mitigated. Bank balances are held with banks and majority of other security deposits are placed majorly with government/statutory agencies.

II. Liquidity Risk

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. The Company’s objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including bilateral loans, debt, and overdraft from banks at an optimized cost. Working capital requirements are adequately addressed by internally generated funds. Trade receivables are kept within manageable levels.

Liquidity Risk Management

The Company’s corporate treasury department is responsible for liquidity and funding as well as settlement. Management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows.

III. 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. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. Financial instruments affected by market risk include loans and borrowings, deposits, investments and derivative financial instruments.

The Company’s activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rates.

Foreign currency risk

The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities in exports and imports which is majorly in US dollars. Hence, to combat the foreign currency exposure, the Company follows a policy wherein the net sales are hedged By forward Contract.

Note:

(i) Above term loan are secured by pari-passu first charge by way of mortgage of immovable properties and hypothecation of moveable fixed assets, both present and future situated at MIDC Boisar, viz Plot No N-198, G-60, E21,E22,E-1, K-40, K-41 E120, E9/3, E9/4, W-60(B), W61(B), W62(A), W71(B), W72(B), W73(B) & T-150 and MIDC Turbhe Plot No D-277 & D-278 in Maharashtra and at GIDC, Sarigam, Bhilad - Gujarat Viz. Plot No 2902, 2904, 211, 213, 2601, 2602, 2603, 2520, 2522 and 3325.

(ii) Loan from Kotak Mahindra bank and The Shamrao Vithal Co-op Bank Ltd is also secured by second charge on current assets of the Company both present and future.

b. Loans from Scheduled Banks Payable on Demand of '. 17829.64 lakhs ( Previous Year Rs, 13,079.42) are secured by hypothecation of Company’s raw materials stock, stock-in-process, finished goods, packing materials, stores & spares, book debts, and all other current assets including goods in transit governed by documents of title and also pari-passu second charge by way of mortgage of immovable properties and hypothecation of movable fixed assets. both present and future situated at MIDC Boisar, Maharashtra viz. Plot No N-198, G-60, E21, E22, E-1, K-40, K-41, E-120, E9/3, E9/4, W-60(B), W61(B), W62(A), W71(B), W72(B), W73(B) & T-150 and MIDC Turbhe Plot No. D-277 & D-278.GIDC, Bhilad, Sarigam- Gujarat viz. Plot No. 2902, 2904, 211, 213, 2601, 2602, 2603, 2520, 2522 and 3325.

6. The Company has foreign exchange exposure because of its trade related (export/import) fund related function. The Company uses forward contracts, Options and Swaps to hedge against its foreign exchange exposures relating to underlying transactions. The Company does not enter into any derivatives instruments for trading or speculation purposes. During the year ended 31.03.2018, the company had hedge in aggregate an amount of Rs, 39,531.06/-Lakhs (previous year Rs, 34,800.84/- Lakhs) out of its annual trade related operations (export& import) aggregating to Rs, 81,729.69/-Lakhs (previous year 81,033.65/- Lakhs) after considering natural hedge.

7. Sales / Income from Operations include export benefits amounting to Rs, 1,409.43/- Lakhs (As at 31st March, 2017 Rs, 2,263.86/- Lakhs)

b) Leave Encashment :

Leave Encashment liability amounting to Rs, 145.56 Lakhs previous year (Rs, 146.94 Lakhs) has been provided in the Accounts.

8. As per Sec 135 of the Companies Act 2013, details of amount to be spent on Corporate Social Responsibility are as below. Gross amount to be spent on the CSR activity during the year is Rs, 199.63 Lakhs. During the year company spent Rs, 199.83 Lakhs (previous year 185.07 Lakhs).

9. Disclosure for operating leases under Ind AS 17 - “Leases”:

During the year Company had entered in to lease transaction covering Lease term of 5 years. The Lease Transaction is covered as Operating Lease as per the Ind AS 17 and all lease payments are recognized as an expense in profit and loss account on straight line basis. Disclosures as per Ind AS 17, Lease Accounting are as below.

*The previous GAAP figures have been reclassified to confirm to Ind AS presentation requirements for the purpose of this note

Notes to First time adoption of Ind AS

a Property, Plant and Equipment:

The Company has elected to continue with the carrying values under previous GAAP for all the items of property, plant and equipment as deemed cost at the date of the transition. The same election has been made in respect of intangible assets.

b Investment:

Investment in Subsidiary: The Company has opted to carry the investment in subsidiaries at the previous GAAP carrying amount at the transition date. Other Equity Instruments: All other equity instruments are classified as FVTOCI.

c Retained Earnings:

Retained earnings as at 1st April, 2016 has been adjusted consequent to Ind AS transition adjustments.

d Deferred Tax:

“Deferred tax under Ind AS has been recognized for temporary differences between tax base and the book base of the relevant assets and liabilities. Under IGAAP the deferred tax was accounted based on timing differences impacting the profit or loss for the period. Deferred Tax on aforesaid Ind AS adjustments has been created for both periods - as on 31st March, 2017 and 1st April, 2016.”

e Revenue from Operations & Excise Duty:

“Under previous GAAP, revenue from sale of goods was presented net of excise duty on sales. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. Excise duty is presented in the Statement of Profit and Loss as part of other expenses. This has resulted in an increase in the revenue from operations and expenses for the year ended 31st March, 2017. The total comprehensive income for the year ended and equity as at 31st March, 2017 has remained unchanged.”

f Re-measurements of Post Employment Benefit Obligation:

“Under Ind AS, re-measurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit and loss. Under the previous GAAP, these re-measurements were forming part of the Statement of Profit and Loss for the year.”

10. Figures of the previous year have been regrouped and rearranged wherever necessary.

11. Accounting Judgments, Estimates and Assumptions:

The preparation of the Company’s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, asset and liabilities, and the disclosure of contingent

Liabilities, at the end of the reporting period However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the assets or liabilities in future periods.