Dishman Pharmaceuticals & Chemicals

1.  Contingent Liabilities to the extent not provided for:
 
 a.  Guarantees given by Bank on behalf of the Company Rs 73.58 Lacs
 (Previous Year Rs. 104.25 Lacs)
 
 b.  Letters of Credit in favor of suppliers Rs 460.58 Lacs (Previous
 Year Rs 1603.53 Lacs)
 
 c.  Outstanding guarantees furnished to the bank in respect of wholly
 owned subsidiaries and a joint venture company Rs. 44046.23 Lacs
 (Previous Year Rs. 38073.08 Lacs)
 
 d.  Claims against the Company not acknowledged Rs. 5.06 Lacs (Previous
 Year Rs. 3.11 Lacs)
 
 e.  Disputed central excise duty (including service tax) liability is
 Rs. 302.04 Lacs (Previous Year Rs. 263.66 Lacs)
 
 f.  Disputed income tax liability Rs. 834.73 Lacs (Previous Year Rs.
 3.92 Lacs) for various assessment years for which appeals are pending
 with Appellate authorities,out of the said amount company has paid
 Rs.380.00 lacs under protest.
 
 g.  Disputed sales tax and central sales tax liability Rs 181.62 Lacs
 (Previous Year Rs. 99.74 Lacs), out of the said amount company has paid
 Rs.24.94 Lacs under protest.
 
 h.  Bills discounted with banks Rs.2861.02 Lacs (Previous Year Rs.
 1811.95 Lacs.)
 
 2.  Estimated amount of contracts remaining to be executed on capital
 accounts not provided for (Net of Advances) Rs. 2948.14 Lacs (Previous
 Year Rs 1526.58 Lacs)
 
 3.  Change in accounting policy
 
 Hitherto, the Company was recognising the exchange rate differences on
 settlement or restatement of foreign currency monetary assets and
 liabilities in the profit and loss account as per the pre-revised
 Accounting Standard 11 ‘ Accounting for effects of changes in foreign
 exchange rates ‘ issued by the Institute of Chartered Accountants of
 India.
 
 During the year, the Company has changed the accounting policy by
 exercising the option related to amortization foreign exchange
 fluctuation differences as per the notification dated March 31, 2009
 issued by the Ministry of Corporate Affairs.  As a result :
 
 a) The exchange differences arising on restatement or settlement of
 long term foreign currency monetary items in so far as they relate to
 acquisition of a depreciable capital asset are adjusted to the cost of
 such asset and depreci- ated over the balance life of the asset.
 
 b) In other cases, they have been accumulated in ‘Foreign Currency
 Monetary Items Translation Difference Account’ and amortized over the
 balance period of such long term asset/ liability but not beyond March
 31, 2011 by recog- nition as an income and expenses in each of such
 periods.
 
 Accordingly, Rs. 896.78 lacs has been added to cost of fixed assets,
 Rs. 413.19 lacs has been accumulated in ‘Foreign Currency Monetary
 Items Translation Difference Account’, Rs. 45.07 lacs being exchange
 differences pertaining to earlier years has been adjusted to the
 balance of the general reserve in the balance sheet and Rs.  137.74
 lacs has been amortized and charged to profit and loss account during
 the year.
 
 The amount remaining to be amortized in subsequent periods as at the
 balance sheet is Rs. 275.49 Lacs.
 
 4.  Share Capital
 
 The subscribed and paid up capital includes 10,13,023 equity shares of
 Rs. 2 each, allotted during the year, on conversion of 4,000 number of
 0.5% Foreign Currency Convertible Bonds (FCCBs) of the principal amount
 of US $ 4 million.
 
 5.  Secured Loans
 
 Secured Foreign Currency Term Loan from Bank of India(amount
 outstanding as at March 31, 2009 Rs. 6455.58 lacs), is secured against
 first pari - passu charge on the fixed assets of the Company created /
 to be created out of the said loan, located/to be located at Bavla and
 also against pledge of the shares of the Company held / to be held in
 wholly owned subsidiary in China, namely Dishman Pharmaceuticals &
 Chemicals (Shanghai) Co.Ltd.
 
 Foreign currency loan from Cooperative Centrale Raifeisen-
 Boerenleenbank BA (trading as Rabobank International), Singapore(amount
 outstanding as at March 31, 2009 Rs.2378.44 lacs) is secured against
 pledge of the Company’s invest- ment in the equity shares of its wholly
 owned subsidiary, namely Dishman Pharma Solutions AG., Switzerland. The
 said loan are also secured against (i) corporate guarantee of Company’s
 wholly owned subsidiaries Dishman Pharma Solutions AG., and Carbogen
 Amcis AG.,Switzerland; (CA) (ii)Pledge of the Dishman Pharma Solutions
 AG’s investment in the equity shares of its wholly owned subsidiary
 namely Carbogen Amcis AG. (iii) Charges over receivables of CA over all
 its present and future book debts; and (iv) First charge on all present
 and future Fixed Assets of CA.
 
 Secured Term Loan from Industrial Development Bank of India Limited
 (amount outstanding as at March 31, 2009 Rs.2830.57 lacs) is secured
 against first pari-passu charge on the fixed assets of the company
 created/to be created against out of the said loan, located / to be
 located at Bavla.
 
 Secured Term Loan from Indusind Bank Limited(IBL) (amount outstanding
 as at March 31, 2009 Rs.4250.00 lacs) is secured against first
 pari-passu charge on the present fixed assets at the company and the
 future assets to be created /affixed/ installed out of IBL term loan
 and all fixed assets located at Bavla.
 
 Hire Purchase Finances are secured by hypothecation of respective
 assets.
 
 Working Capital Loans are secured against hypothecation of inventories,
 collateral security of book debts, first charge on fixed assets of the
 Company situated at Naroda, except EOU Unit and second charge on
 specific fixed assets of the Company situated at Bavla
 
 6.  Unsecured loans from banks are personally guaranteed by one of the
 promoter directors.
 
 Unsecured loans include loans from Life Insurance Corporation of India
 availed on the Keyman insurance policies of the key personnel of the
 entity.
 
 7.  The Company has pledged its 1 equity share of Dishman FZE with ABN
 AMRO Bank N.V. as security against loan availed by its subsidiary
 company, Dishman FZE.
 
 8.  In the absence of any information from venders regarding the
 status of their registration under the Micro Small and Medium
 Enterprise Development Act 2006  the company is unable to comply with
 the disclosures required to be made under the said Act.
 
 9.  Employee Benefits
 
 The present value of gratuity and leave encashment obligations is
 determined based on actuarial valuation using the Projected Unit Credit
 Method, which recognizes each period of service as giving rise to
 additional unit of employee benefit entitlement and measures each unit
 separately to build up the final obligation.  Details of post
 retirement benefits are as follows:
 
 Entitlement of maximum remuneration to Managing Director @ 5% of the
 Net Profit as per Sections 198 and 309(5) of the Companies Act, 1956 is
 Rs.496.43 lacs, as against which managerial remuneration provided for
 in the current year is Rs. 466.67 lacs.
 
 10.  Segmental Reporting
 
 The Company is in the business of manufacturing and marketing of
 
 A.  Contract Research & Contract Manufacturing (CRAMS).
 
 B.  Bulk Drugs, Intermediates, Quats & Specialty Chemicals
 
 Segment revenue of the above business segment includes sales export
 incentive and income from Research and Develop- ment activity.
 
 Segment revenue in geographical segment considered for disclosure is as
 follows:
 
 A.  Domestic Sales
 
 B.  Export Sales
 
 The Segment revenue, results, assets and liabilities include the
 respective amounts identifiable to each of the segment and amount
 allocated on a reasonable basis by management
 
 11.  On 3rd January, 2009, the Company had made an application to the
 Ministry of Corporate Affairs, Government of India (MCA), for granting
 exemption under Section 212(8) to the Company from attaching the
 Balance Sheet and Profit Loss Account of the subsidiaries under Section
 212(1) of the Companies Act, 1956. The Company is still waiting for the
 said approval. Upon receipt of the order from the MCA, the Company will
 take appropriate action before dispatch of the Annual reports to the
 shareholders of the company. However, the key details of the
 subsidiaries are attached along with the consoli- dated financial
 statement.
 
 12.  Donation includes of Rs.100 Lacs given to Bhartiya Janta Party
 (Previous Year Rs. NIL).
 
 13.  Previous year figures have been regrouped / rearranged wherever
 necessary.