Orchid Chemicals and Pharmaceuticals

1.  Sales tax recoverable has been recorded on the basis of the claims
 submitted or in the process of being submitted, as per rules relating
 to EOU and which in the opinion of the Company are recoverable.
 
 (Rs. lakh)
 
                               As at 31.03.2009      As at 31.03.2008
 
 2. a. Other monies for which 
 company is contingently liable :
 
 - Bills Discounted                  21402.71            21395.61
 
 - Unexpired Letters of Credit       13295.03            15217.56
 
 - Bank Guarantees outstanding         518.89              946.82
 
 - Claims against the Company 
 not acknowledged as debts
 
 Excise demands under dispute 
 pending before Excise authorities    1182.43              861.50
 
 Service Tax dispute pending before 
 High Court of Chennai                 103.16               56.03
 
 b.  Provision and contigencies in accordance with AS 29 :
 
 Opening Balance                         -                    -  
 Additions during the year            4000.00                 -
 
 Closing Balance                      4000.00                 -
 
 3.  The Company has filed an appeal against the demand made by the
 Income Tax department amounting to Rs. 98.94 lakh-(Previous year Rs.
 53.82 lakh). No provision has been made as the Company is confident of
 winning the appeal. No provision has also been made for demand of
 interest amounting to Rs. 68.88 lakh (Previous year Rs. 68.88 lakh) as
 petition has already been filed for waiver of interest.
 
 4.  Foreign Currency Convertible Bonds (FCCBs) :
 
 a) The Company raised FCCBs during 2006-07 aggregating to USD 175
 million (Rs. 77358.75 lakh) with an option to the investor to convert
 the FCCBs into equity shares of the Company at an initial conversion
 price of Rs. 348.335 per share at a fixed rate of exchange on
 conversion Rs. 43.93 = USD 1, at any time after April 9, 2007 and prior
 to February 18, 2012. Further the Company has an option of early
 redemption of these FCCBs in whole at any time on or after February 28,
 2010 and prior to February 21, 2012, subject to certain conditions.
 Unless previously converted, redeemed or repurchased and cancelled, the
 FCCBs will be redeemed on February 28, 2012 at 142.77% of their
 principal amount.
 
 During the year 2008-09, the Company bought FCCBs and cancelled to the
 extent of USD 37.80 million and the outstanding FCCBs as at March 31,
 2009 is USD 137.20 million.
 
 c) Provision has already been made for the entire premium payable on
 redemption of FCCBs amounting to Rs. 36830.08 lakh by debiting the
 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 SPA will be suitably adjusted in the respective
 years.
 
 The debit to share premium account for premium on FCCBs and for issue
 expenses have been made on the gross value without adjusting any tax
 impact.  Tax benefits accruing to the Company on account of claiming
 such expenses will be credited to the SPA account in the year in which
 the benefit is enjoyed by the Company.
 
 The provision for premium on redemption of FCCBs debited to SPA is
 being restated at the exchange rate prevailing at the year end and the
 gain/(loss) of (Rs. 7414.30 lakh) on account of such restatement is
 adjusted to the security premium account.
 
 d) Even though the Company has provided for the premium on redemption
 of FCCBs as per note [c] above, the Company also makes provision for
 dividend in the books of account on the equity shares to be allotted
 upon conversion of FCCBs outstanding as at respective year end. Since
 the Company is obliged, as per SEBI guidelines, to pay dividend to
 those FCCBs holders who convert their FCCBs into equity after adoption
 of the financial statements and upto the book closure date.
 
 5. Amounts Due to Micro, Small and Medium Enterprises
 
 The Identification of Micro, Small and Medium Enterprises Suppliers as
 defined under The Micro, Small and Medium Enterprises Development Act
 2006 is based on the Information available with the management. As
 certified by the Management, the amounts overdue as on March 31, 2009
 to Micro, Small and Medium Enterprises on account of principal amount
 together with interest, aggregate to Rs. Nil (Previous year Nil).
 
 6. In terms of the resolution passed by the Company at the EGM dated
 October 21,1999 Employee Stock Option Scheme was extended to the
 employees of the Company. Accordingly options totalling 15,00,000 Nos
 were given to the employees as per the scheme formulated under
 “ORCHID-ESOP 99 scheme by the Compensation committee of the Board of
 Directors. Each option is convertible into one equity share of Rs. 10/-
 each at a price of Rs. 243.35 including premium for 6,00,000 Nos, Rs.
 252 including premium for 3,07,925 Nos, Rs. 300.65 including premium
 for 2,92,075 Nos and Rs. 339.25 for 3,00,000 Nos.  No entries were
 passed in the books as the options were given at the market prices
 prevailing on the date of issuance of options.
 
 A fair and reasonable adjustment in share price/ the number of options
 outstanding was made by the Company in respect of the Employee Stock
 Options granted but not exercised by the Employees due to the corporate
 action of issue of bonus shares during October 2005. The total number
 of options outstanding and the price was adjusted so that the total
 value and options available to each option holder remained the same.
 
 Consequently the revised and adjusted prices per share are Rs. 162.24
 (Rs. 243.35), Rs. 168.00 (Rs. 252.00) and Rs. 200.44 (Rs. 300.65)
 respectively for 6,00,000 Nos, 3,07,925 Nos and 2,92,075 Nos of options
 granted by the Company.
 
 For the 3,00,000 options granted during April 2006 at a price of Rs.
 339.25, the Compensation Committee of the Board of Directors considered
 repricing of the options in the interest of the employees, due to the
 fall in the price of the shares of the Company and accordingly approved
 a repricing of the options from Rs. 339.25 to Rs. 193.25 as per the
 closing price of Orchid at National Stock Exchange on August 11 , 2006.
 The revision in the price has been approved by the shareholders at the
 Annual General Meeting held on July 19, 2007.
 
 Pursuant to the exercise of options by employees, the Allotment
 Committee of the Board at its meeting held on April 26, 2008, May 29,
 2008 and August 13, 2008 allotted 7,525, 16,175, and 3,000 equity
 shares respectively to the employees under ORCHID ESOP 99 Scheme.
 536,153 Options were outstanding as at March 31, 2009 including the
 additional number of options adjusted, due to the bonus issue.
 
 In terms of the resolution passed by the Company at the AGM dated July
 18, 2005 the shareholders approved the scheme formulated under
 “ORCHID-ESOP 2005”for allotting 10,00,000 Nos. Accordingly 6,10,000
 options were given to the eligible directors and employees by the
 compensation committee of the Board of Directors at a meeting held on
 August 12, 2006. Each option is convertible into one equity share of
 Rs. 10/- each at a price of Rs. 193.25 per share including premium.
 
 Pursuant to the exercise of options by employees, the Allotment
 Committee of the Board at its meeting held on April 26, 2008, May 29,
 2008, August 13, 2008 and August 29, 2008 allotted 1,900, 200, 1,000
 and 1,500 equity shares respectively to the employees and 84,325
 Options were outstanding as at March 31, 2009 under ORCHID ESOP 2005
 Scheme.
 
 7.  a) In terms of the resolution passed by the Company on February
 14, 2007, 50,00,000 warrants were allotted to the Promoter /Promoter
 Group(s), the relative(s) of the Promoter on March 01, 2007. These
 warrants are eligible for conversion at the option of the Warrants
 holders, into equity shares of the Company at a price of Rs. 202.58 per
 share within a period of 18 months of the date of allotment.
 
 During the year, pursuant to the exercise of option by the warrant
 holders, the Allotment Committee of the Board at its meeting held on
 August 13, 2008 and August 29, 2008 have allotted 381,000 and 41,79,000
 equity shares respectively. The balance 440,000 warrants were not
 exercised within the stipulated period. Hence on September 01, 2008 the
 10% advance paid by them amounting to Rs. 89.14 lakh on the unexercised
 warrants was forfeited and credited to capital reserve.
 
 b) Other liabilities include Rs. Nil (Previous year Rs. 1,012.90 lakh)
 being the amount received as advance against the warrants issued to the
 promoter group, including Rs. Nil (Previous year Rs. 7.09 lakh) from a
 Director.
 
 8.  a) Provision for Deferred tax for the year Rs. 1371.65 lakh
 (Previous year Rs. 2341.55 lakh)
 
 9. Segmental Reporting
 
 The Company was disclosing segment information classifying the business
 as Bulk drugs and Formulations till the financial year 2004-05. However
 in view of integration of bulk actives and formulations business, with
 the commissioning of Generics formulation facilities from the financial
 year 2005-06, the Company considers the business as one interrelated
 and integrated business of Pharmaceutical products and hence no
 separate segmental reporting is provided.
 
 10.  On completion of winding up process of Joint Venture/Subsidiary
 company the value of investments amounting to Rs.134.42 lakhs (Previous
 year Rs.112.13 lakhs) written off has been adjusted against the
 provision already made in earlier year amounting to Rs.134.42 lakhs
 (Previous year Rs.112.13 lakhs).
 
 11. The Central Government by an order under Section 211(4) of the
 Companies Act,1956 dt. 23.04.2009 has exempted the Company from the
 disclosure of quantitative details in compliance of para 3(i)(a),
 3(ii)(a), 3(ii)(b) and 3(ii)(d) of Part II of Schedule VI of the
 Companies Act, 1956 for the financial year ending 31-03-2009.
 
 12.  Sundry Debtors shown in the Balance sheet are subject to
 confirmations. The Company has sent confirmation letters to all the
 debtors. In view of the recessionary trend, some of the debtors have
 been requesting for discounts and the Company is in the process of
 negotiations with such customers. The Company has made adequate
 provisions for such estimated claims under the head “Provision for
 Rebates / Discounts”.
 
 13.  Previous years figures have been re-grouped wherever necessary to
 conform to current years classification.