Nectar Lifesciences

1.  Secured Loans Term Loans
 
 I.  Term Loan of Rs. 674.70 million from Vijaya Bank is secured by way
 of First Pari Passu Charge with Punjab National Bank (PNB) & State Bank
 of India (SBI) on all the fixed assets of the Company and further
 secured by way of Second Pari Passu Charge with PNB & SBI Bank on all
 the current assets of the Company and personal guarantee of directors
 namely Shri. Sanjiv Goyal & Smt. Raman Goyal.
 
 II.  Term Loan of Rs. 89.30 million from PNB is secured by way of First
 Pari Passu Charge with Vijaya Bank & SBI on all the fixed assets of the
 Company and further secured by way of Second Pari Passu Charge with
 Vijaya Bank & SBI on all the current assets of the of Company and
 personal guarantee of directors namely Shri. Sanjiv Goyal & Smt. Raman
 Goyal.
 
 III.  Term Loan of Rs. 321.39 million from SBI is secured by way of
 First Pari Passu Charge with Vijaya Bank & PNB on all the fixed assets
 of the Company and further secured by way of Second Pari Passu Charge
 with Vijaya Bank & PNB on all the current assets of the Company and
 personal guarantee of directors namely Shri. Sanjiv Goyal & Smt. Raman
 Goyal.
 
 IV.  Car Loans of Rs. 1.51 million from HDFC Bank Ltd is secured
 against hypothecation of respective Cars.
 
 V.  Car Loans of Rs. 9.02 million from ICICI Bank Ltd is secured
 against hypothecation of respective Cars.
 
 Working Capital Limits
 
 VI.  Working Capital Limits Rs. 2328.05 million (Previous Year Rs.
 1481.85 million) from Punjab National Bank Rs. 1354.06 million
 (Previous Year Rs. 907.91 million) and State Bank of India Rs. 973.99
 million (Previous Year Rs. 573.94 million) are secured by way of first
 pari passu charge on all the current assets of the Company and further
 secured by way of Second pari passu Charge on all the fixed assets of
 the Company and personal guarantee of directors namely Shri. Sanjiv
 Goyal & Smt. Raman Goyal.
 
 2.  Investments
 
 i) Investments considered long term are stated at cost and current
 investments are stated at cost or market value whichever is less.
 
 ii) Investments in Subsidiary Company are stated at cost.
 
 3.  Current Assets, Loans & Advances
 
 i) In the opinion of the directors of the Company, the current assets,
 loans and advances are approximately of the value as stated, if
 realized in the ordinary course of business.
 
 4.  Current Liabilities
 
 i) As regards compliance of provisions relating to dues to the Small
 Scale Industries in terms of the Notification No.  GSR (719)E dated
 16.11.2007 issued by Ministry of Corporate Affairs , the Company has
 identified some of the suppliers as Small Scale Industrial Undertakings
 on the basis of information available with the company. However none of
 these parties has a credit balance more than Rs. 0.10 million
 outstanding for more than 30 days as on balance sheet date.
 
 The Company has identified Micro, Small & Medium Enterprises as per
 MSMED Act, 2006 on the basis of information made available. The
 following are the parties along with their respective outstanding
 balance as at 31.03.2008
 
                                              (Rupees in Million)
 
 Name of Party Type of                         March 31, March 31,
 Enterprise                                      2008      2007
 
 (i) Deeksha Packaging Micro                   Rs. 0.10     1
 
 (ii) Shiva Scientific Glass Pvt. Ltd.  Micro  Rs. 0.03   Rs. 0.02
 
 ii) Investor Education and Protection Fund
 
 Other liabilities include Rs. 0.63 million which relates to unclaimed
 dividend and share application money refundable.  Out of it no amount
 has become due for deposit to Investor Education and Protection Fund as
 on balance sheet date.
 
 5.  Contingent Liabilities
 
 (A)                                            (Rupees in Million)
 
 Sr. No.  Particulars                          March 31,    March 31,
                                                   2008        2007
 
 i) Letter of Credit (Foreign / Inland)          414.39      55.18
 
 ii) Bank Guarantees                               4.77       7.33
 
 iii) Bills Discounted                           303.63     226.53
 
 iv) Corporate Guarantee given to SBI - 
 Colombo against credit facilities availed 
 by M/s Chempharma (P) Ltd., Sri Lanka              Nil     216.68
 
 v) Differential amount of custom duty 
 in respect of machinery imported under 
 EPCG Scheme                                      59.12      39.56
 
 vi) Claims not acknowledged as debts:- **
 
 - Income Tax matters                              6.01       5.98
 
 ** The matters are subject to legal proceedings in the ordinary course
 of business. The legal proceedings, when ultimately concluded will not,
 in the opinion of management, have a material effect on the results of
 operation or financial position of the company.
 
 (B) The Company has given corporate guarantee against crop loan of Rs.
 100.76 millions from HDFC Bank (Previous Year, Nil) for disbursement to
 the farmers. However, utilisation of same has not been ascertained.
 
 iv) Income Tax
 
 Current Tax
 
 Provision for Income tax and fringe benefit tax has been made as per
 Income-tax Act, 1961.
 
 Deferred Tax
 
 In compliance with Accounting Standard (AS-22) relating to “Accounting
 on Taxes on Income” issued by the Institute of Chartered Accountants of
 India, the Company has provided Deferred Tax Liability accruing during
 the year aggregating to Rs. 81.96 million and it has been recognized in
 the Profit & Loss Account. In accordance with clause 29 of Accounting
 Standard (AS 22) Deferred tax Assets and Deferred tax liabilities have
 been set off.
 
 vi) A major fire occurred on May 7, 2007 in Derabassi Unit, against
 which Insurance claim was filed by the company with the Insurance
 Company. During the year 2007-08, Rs. 200 millions has been received as
 adhoc payment. Net value of Assets including inventory destroyed in
 fire has been transferred to insurance claim account. Any
 deficit/surplus on this account will be accounted for (if required) in
 the year of final settlement of claim.
 
 vii) Purchase of Raw Material includes goods worth Rs. 353.86 millions
 purchased for trading.
 
 D.  SEGMENT REPORTING
 
 Business Segments
 
 The Company operates only in the business segment of “Pharmaceuticals
 Products”, and in the opinion of the management the inherent nature of
 activities in which it is engaged are governed by the same set of risks
 and reward. As such the activities are identified as single segment in
 accordance with the Accounting Standard (AS-17) issued by the Institute
 of Chartered Accountants of India.
 
 E.  RELATED PARTY DISCLOSURES
 
 Related party disclosures as required under Accounting Standard (AS-18)
 on “Related Party Disclosures” issued by the Institute of Chartered
 Accountants of India are given below: - a) Relationship
 
 i) Subsidiary Companies
 
 M/S Chempharma Private Limited - Sri Lanka
 
 ii) Joint Ventures and Associates
 
 NIL
 
 iii) Key Management Personnel (Managing Director/Whole-time directors)
 
 Shri. Sanjiv Goyal
 Smt. Raman Goyal
 Shri. Aryan Goyal
 
 iv) Relative of the Key Management Personnel
 
 NIL
 
 v) Entities over which key management personnel/their relatives are
 able to exercise significant influence*
 
 M/s Surya Narrow Fabrics - New Delhi
 
 M/s Chempharma Private Limited - Sri Lanka
 
 M/s Nectar Lifestyle Limited- New Delhi
 
 * With whom the company had transactions during the year.
 
 F.  FOREIGN CURRENCY CONVERTIBLE BOND (FCCB)
 
 During the Previous year (2006-2007), the company raised Zero Coupon
 FCCB aggregating to USD 35 million (Rs. 1563.50 Million as on the date
 of the issue) for financing its capital expenditure and other permitted
 expenditure. The bond holders, have the option to convert the FCCB into
 equity shares of the company at an initial conversion price of Rs.
 331.74 per share now reset to Rs. 263.22 per share at a fixed rate of
 exchange on conversion Rs. 44.6725 per US$, at any time on and after
 June 4, 2006 and prior to April 16, 2011. Further the company has an
 option of early redemption of these FCCB in whole at any time on or
 after April 25, 2009 and prior to April 26, 2011, subject to certain
 conditions. Unless previously converted, redeemed or repurchased and
 cancelled, the FCCBs will be redeemed in US$ on April 26, 2011 at
 150.71 per cent of their principal amount.
 
 There was FCCB conversion amounting to Rs. 86.34 millions (USD 2
 million) into Equity Capital affected up to March 31, 2008.
 
 The FCCBs premium payable on redemption Rs. 107.29 million (previous
 year Rs. 119.99 million) being the pro-rata charge for the year have
 been made on the gross value without adjusting any tax impact, have
 been adjusted against Securities Premium account (SPA). In the event
 that the conversion option is exercised by the holder of FCCBs in the
 future, the amount of premium charged to Securities Premium account
 (SPA) will be suitably adjusted in the respective years.
 
 G.  DERIVATIVES
 
 A).  Commodity Derivatives
 
 The company uses the commodity future derivatives to take deliveries
 and hedge its risk associated with menthol and its allied products
 price fluctuation relating to certain commitments and future
 transactions. The use of such forward contracts is governed by
 companys strategy associated with such products.
 
 The company doesnt use forward contracts merely for speculative
 purposes as some contracts are settled by physical delivery also.
 
 M.  IMPAIRMENT OF ASSETS
 
 Management periodically assesses using external and internal sources
 whether there is an indication that an asset may be impaired.
 Impairment occurs where the carrying value of future cash flows
 expected to arise from the continuing use of the assets and its
 eventual disposal. The impairment loss to be expensed is determined as
 the excess of the carrying amount over the higher of the assets net
 sales price or present value as determined above.