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SENSEX NIFTY India | Notes to Account > Pharmaceuticals > Notes to Account from Cipla - BSE: 500087, NSE: CIPLA


BSE: 500087|NSE: CIPLA|ISIN: INE059A01026|SECTOR: Pharmaceuticals
May 20, 16:00
21.65 (3.98%)
VOLUME 119,504
May 20, 15:56
21.3 (3.91%)
VOLUME 1,586,746
Mar 17
Notes to Accounts Year End : Mar '18

Corporate information

Cipla Limited (“Cipla” or “the Company”) is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Cipla is a global pharmaceutical company which uses cutting edge technology and innovation to meet the everyday needs of all patients. The Company has its wide network of operations in local as well foreign markets.

Amendments to Ind AS 12 Recognition of Deferred Tax Assets for Unrealised Losses

The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.

Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the changes in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact. These amendments are effective for annual periods beginning on or after 1 April 2018. The Company will adopt the new standard on the required effective date. On transition, the effect of this change is not expected to be material for the Company.

Ind AS 115

In March 2018, the Ministry of Corporate Affairs has notified the Companies (“Indian Accounting Standards”) Amended Rules 2018 (“amended rules”). As per the amended rules, Ind AS 115 “Revenue from contracts with customers” supersedes Ind AS 11, “Construction contracts” and Ind AS 18, “Revenue” and is applicable for all accounting periods commencing on or after 1 April 2018.

Ind AS 115 introduces a new framework of five step model for the analysis of revenue transactions. The model specifies that revenue should be recognised when (or as) an entity transfer control of goods or services to a customer at the amount to which the entity expects to be entitled. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. The new revenue standard is applicable to the Company from 1 April 2018.

The standard permits two possible methods of transition:

(i) Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors.

(ii) Retrospectively with cumulative effect of initially applying the standard recognised at the date of initial application (Cumulative catch - up approach)

The Company is evaluating the requirement of the amendment and the impact on the financial statements. The effect on adoption of Ind AS 115 is expected to be insignificant.

- Terms and rights attached to equity shares

The Company has only one class of equity shares having a par value of RS.2 per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. 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 number of equity shares held by the shareholder.

- The Company does not have any holding company.

- Equity shares reserved for issue under employee stock options

Refer note 43 for number of stock options against which equity shares to be issued by the Company upon vesting and exercise of those stock options by the option holders as per the relevant schemes.

Share application money pending allotment

- Nil as at 31st March, 2018 (as at 31st March, 2017 is RS.11,172).

Nature and purpose of reserve:-

Capital reserve

The Company recognised profit or loss on sale, issue, purchase or cancellation of the Company’s own equity instruments to capital reserve. Capital reserve may be used by the Company only for some specific purpose.

Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. These reserve is utilised in accordance with the provisions of the Act.

General reserve

The General reserve is used from time to time to transfer profit from retained earning for appropriation purpose.

Hedge reserve

For the forward contracts designated as cash flow hedges, the effective portion of the fair value of forward contracts are recognised in cash flow hedging reserve under other equity.

Employee stock options reserve

Companies has established various equity settled share based payments plan for certain categories of employee of the Company.

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

Note 1: Lease accounting Where the Company is a lessee

The Company has obtained certain premises for its business operations (including furniture and fixtures, therein as applicable) under cancellable operating lease or leave and license agreements ranging from 11 months to 5 years or longer which are subject to renewal at mutual consent. The cancellable lease arrangements can be terminated by either party after giving due notice. Lease payments are recognised in the profit or loss under ‘Rent’ in Note 36.

Where the Company is a lessor

The Company has given certain premises under operating lease or leave and license agreement. The Company retains substantially all risks and benefits of ownership of the leased asset and hence classified as Operating lease. Lease income on such operating lease is recognised in Statement of Profit and Loss under ‘Rent’ in Note 29.


i. Claims against the Company not acknowledged as debt include claim relating to pricing, commission etc.

ii. It is not practicable for the group to estimate the timing of cash outflow, if any, in respect of our pending resolution of the respective proceedings as it is determined only on receipt of judgements/ decisions pending with various authorities.

B. Details of other litigation:

(i) The Government of India has served demand notices in MarcRs.1995 and May 1995 on the Company in respect of six bulk drugs, claiming that an amount of Rs. 5.46 Crore along with interest due thereon is payable into the DPEA under the Drugs (Prices Control) Order, 1979 on account of alleged unintended benefit enjoyed by the Company. The Company has filed its replies to the notices and has contended that no amount is payable into the DPEA under the Drugs (Prices Control) Order, 1979.

(ii) The Company had received various notices of demand from the National Pharmaceutical Pricing Authority (NPPA), Government of India, on account of alleged overcharging in respect of certain drugs under the Drugs (Prices Control) Order, 1995 (“DPCO, 1995”). The total demand against the Company as stated in NPPA public disclosure amounts to RS.2,606.59 Crore.

Out of the above, demand notices pertaining to a set of products viz, Norfloxacin, Ciprofloxacin, Salbutamol and Theophylline were challenged by the Company (i) in the Hon’ble Bombay High Court on the ground that bulk drugs contained in the said formulations are not amenable to price control, as they cannot be included in the ambit of price control based on the parameters contained in the Drug Policy, 1994 on which the DPCO, 1995 is based and (ii) in the Hon’ble Allahabad High Court on process followed for fixation of pricing norms. These Petitions were decided in favour of the Company and the matters were carried in appeal by the Union of India to the Hon’ble Supreme Court of India. The Hon’ble Supreme Court of India vide its judgment dated 1st August, 2003 restored the said Writ Petitions to the Bombay High Court with directions that the Court will have to consider the Petitions afresh, having due regard to the observations made by the Supreme Court in its judgment. On Union of India filing Transfer Petitions, the Supreme Court ordered transfer of the said petitions restored to the Bombay High Court for being heard along with the Appeal filed against the Allahabad High Court order. Subsequently, vide its Order dated 20th July, 2016 the Hon’ble Supreme Court recalled its transfer order and remanded the Petitions to Bombay High Court for hearing. While remanding the matter to Bombay High Court, the Hon’ble Supreme Court directed Cipla to deposit 50% of the demanded amount with NPPA as stated in its order dated 1st August, 2003 which at that point of time was RS.350.15 Crore. Complying with the directions passed by the Hon’ble Supreme Court, Cipla has deposited an amount of RS.175.08 Crore which has been received and acknowledged by NPPA. Furthermore, the Company has not received any further notices post such transfer of cases to Bombay High Court. Meanwhile, the Hon’ble Supreme Court of India vide its Order and Judgment dated 21st October,2016, allowed the Appeals filed by the Government against the Judgment and Order of the Hon’ble Allahabad High Court regarding basis of fixation of retail prices.

The said order was specific to fixation of retail prices without adhering to the formula/process laid down in DPCO, 1995. However, the grounds relating to inclusion of certain drugs within the span of price control continues to be sub-judice with the Hon’ble Bombay High Court. The Company has been legally advised that it has a substantially strong case on the merits of the matter, especially under the guidelines/principles of interpretation of the Drug Policy enunciated by the Hon’ble Supreme Court of India. Although, the decision of Hon’ble Supreme Court dated 21st October, 2016 referred above was in favour of Union of India with respect to the appeals preferred by the Government challenging the Hon’ble Allahabad High Court order, basis the facts and legal advice on the matter sub-judice with the Hon’ble Bombay High Court, no provision is considered necessary in respect of the notices of demand received till date aggregating to RS.1,736.00 Crore. It may be noted that NPPA in its public disclosure has stated the total demand amount against the Company in relation to the above said molecules to be RS.2,282.40 Crore (after adjusting deposit of RS.175.08 Crore), however, the Company has not received any further notices beyond an aggregate amount of RS.1,736.00 Crore.

Note 2: Employee benefits

Employee benefits

i Short term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, short terms compensated absences, etc., and the expected cost of bonus, ex-gratia are recognised in the period in which the employee renders the related service.

ii Long term employee benefits

Disclosure in respect of employee benefits persuant to Ind AS -19

a. Brief description of the Plans

Defined contribution plan :

The Company’s defined contribution plan is Employees’ Pension Scheme (under the provisions of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952) since the Company has no further obligation beyond making the contributions.

Defined benefit and other long term benefit plans :

i. The Company has two schemes for long term benefits namely, provident fund and gratuity:

The provident fund plan, a funded scheme is operated by the Company’s Provident Fund Trust, which is recognised by the Income tax authorities and administered through trustees/appropriate authorities.

The Company provides for gratuity, a defined benefit plan based on actuarial valuation as of the reporting date, based upon which, the Company contributes all the ascertained liabilities to the Insurer Managed Funds. The Company operates gratuity plan through a trust, wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement, whichever is earlier. The benefit vests after five years of continuous service. In case of some employees, the Company’s scheme is more favourable as compared to the obligation under Payment of Gratuity Act, 1972.

ii. The employees of the Company are also entitled to leave encashment .The provision is made based on actuarial valuation for leave encashment at the year end.

b. Nature of benefits

The Company operates a defined benefit final salary gratuity plan which is open to new entrants. The gratuity benefits payable to the employees are based on the employee’s service and last drawn salary at the time of leaving. The employees do not contribute towards this plan and the full cost of providing these benefits are met by the Company.

c. Regulatory framework

There are no minimum funding requirements for a gratuity plan in India. The trustees of the gratuity fund have a fiduciary responsibility to act according to the provisions of the trust deed and rules. Since the fund is Income tax approved, the Company and the trustees have to ensure that they are at all times fully compliant with the relevant provisions of the Income Tax Act and Rules. Besides this if the Company is covered by the Payment of Gratuity Act, 1972 then the Company is bound to pay the statutory minimum gratuity as prescribed under this Act.

d. Governance of the plan

The Company has setup an income tax approved irrevocable trust fund to finance the plan liability. The trustees of the trust fund are responsible for the overall governance of the plan.

e. Inherent risks

The plan is of a final salary defined benefit in nature which is sponsored by the Company and hence it underwrites all the risks pertaining to the plan. In particular, there is a risk for the Company that any adverse salary growth or demographic experience or inadequate returns on underlying plan assets can result in an increase in cost of providing these benefits to employees in future. Since the benefits are lump sum in nature the plan is not subject to any longevity risks

f. Charge to the profit or loss

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in employment market.

The sensitivity analysis below has been determined based on reasonable possible changes of the respective assumption occurring at the end of the reporting period while holding all other assumptions constant:

Note: 3 Related Party Disclosures

As per Ind AS-24, “Related Party Disclosures”, the related parties where control exists or where significant influence exists and with whom transaction have taken place are as below:

A. Subsidiary Companies including step-down subsidiaries, associate companies and joint venture :

B. Key management personnel

1 Ms Samina Vaziralli - Executive Vice Chairperson [appointed as executive director (w.e.f. 10th July, 2015) and as Executive Vice-Chairperson (w.e.f. 1st September, 2016)]

2 Mr Umang Vohra - Managing Director and Global Chief Executive Officer (Global Chief Operating Officer and Global Chief Financial Officer upto 31st July, 2016; Global Chief Operating Officer from 1st August, 2016 to 31st August, 2016 and Managing Director and Global Chief Executive Officer w.e.f. 1st September, 2016)

3 Mr S. Radhakrishnan - Whole-time Director (upto 11th November, 2017)

4 Mr Kedar Updhaye - Global Chief Financial Officer (w.e.f 1st August, 2016)

5 Mr Subhanu Saxena - Managing Director and Global Chief Executive Officer (resigned w.e.f close of business hour on 31st August, 2016)

C. Non-executive Chairman & Non Executive Vice Chairman

1 Dr Y. K. Hamied, Chairman

2 Mr M. K. Hamied,Vice Chairman

D. Non-executive Directors

1 Mr Ashok Sinha

2 Mr Adil Zainulbhai

3 Ms Punita Lal

4 Ms Naina Lal Kidwai

5 Ms Ireena Vittal(w.e.f. 1st December,2016)

6 Mr Peter Lankau( w.e.f. 10th January,2017)

7 Dr Peter Mugyenyi

8 Mr S. Radhakrishnan - (w.e.f. 12th November, 2017)

E. Entities over which Key management personnel are able to exercise significant influence

1 Cipla Foundation

2 Hamied Foundation (w.e.f. 3rd February 2016)

3 Cipla Cancer & AIDS Foundation

F. Trust over which entity has control/significant influence

1 Cipla Limited Employee’s Provident Fund Trust

2 Cipla Limited Employee’s Gratuity Trust

3 Cipla Employees Stock Option Trust

4 Cipla Health Employees Stock Option Trust

Disclosure in respect of related parties

During the year, the following transactions were carried out with the related parties in the ordinary course of business:

Note 4: Employee stock option scheme

Employee stock option plans

The Company has implemented “ESOS 2013”, “ESOS 2013 - A” and “ESOS 2013 - B” as approved by the Shareholders on 8th April 2013, 22nd August 2013 and 22nd August 2013 respectively. Details of the Options granted during the year under the Scheme(s) are as given below:

The options are granted at an exercise price, which is in accordance with the relevant SEBI guidelines in force, at the time of such grants. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of RS.2 each.

Note 5: Segment information

In accordance with Indian Accounting Standard (Ind AS) -108 “Operating Segments”, Segment information has been given in the consolidated financial statements of Cipla Limited, and therefore, no separate disclosure on segment information is given in these financial statements.

Note 6:

Fair value measurement

The fair value of financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

The carrying amount of trade receivable, trade payable, capital creditors, loans, cash and cash equivalents and other bank balances as at 31st March 2018 and 31st March 2017 are considered to be the same as their fair values, due to their short term nature. Difference between carrying amounts and fair values of other financial assets, other financial liabilities and short term borrowings subsequently measured at amortised cost is not significant in each of The year presented and the same are classified as level 3.

Financial Instruments with fixed and variable interest rates are evaluated by the company based on parameters such as interest rate and individual credit worthiness of the counter party. Based on this evaluation, allowances are taken to account for the expected losses of these receivables.

Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method at 31st March 2018 and 31st March, 2017. The different levels have been defined as follows.

Level 1 - category includes financial assets and liabilities, that are measured in whole or in significant part be reference to published quotes in an active market.

Level 2 - category includes financial assets and liabilities measured using a valuation technique based on assumptions that are supported by prices from observable current market transactions. These include assets and liabilities for which pricing is obtained via pricing services, but where prices have not been determined in an active market, financial assets with fair values based on broker quotes and assets that are valued using the Company’s own valuation models whereby the material assumptions are market observable. The majority of Company’s over-the-counter derivatives and several other instruments not traded in active markets fall within this category.

Level 3 - category includes financial assets and liabilities measured using valuation techniques based on non market observable inputs. This means that fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. However, the fair value measurement objective remains the same, that is, to estimate an exit price from the perspective of the Company. The main asset classes in this category are unlisted equity investments as well as unlisted funds.

Financial risk management objectives and policies

The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance.

The Company’s financial liabilities comprise of borrowings, trade payable and other liabilities to manage its operation and financial assets includes trade receivables and other receivables etc. arises from its operation.

The Company has constituted a Risk Management Committee consisting of majority of directors and senior managerial personnel. The Company has a robust Business Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimise adverse impact on the business objectives and enhance Company’s competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for business segments.

The Company has instituted a self governed Risk Management framework based on identification of potential risk areas, evaluation of risk intensity, and clear- cut risk mitigation policies, plans and procedures both at the enterprise and operating levels. The framework seeks to facilitate a common organisational understanding of the exposure to various risks and uncertainties at an early stage, followed by timely and effective mitigation. The Audit Committee of the Board reviews the risk management framework at periodic intervals. Our risk management procedures ensure that the management controls various business related risks through means of a properly defined framework.

Market risk

The Company operates internationally and a major portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk to the extent that there is mismatch between the currencies in which its sales and services and purchases from overseas suppliers in various foreign currencies. Market Risk is the risk that changes in market prices such as foreign exchange rates will effect groups income or value of its holding financial assets/ instruments. The Company also holds derivative financial instruments such as foreign exchange forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The exchange rate between the Rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Company’s operations are adversely affected as the Rupee appreciates/ depreciates against US dollar (USD), Euro (EUR), South African Rand (ZAR) and British Pound (GBP).

Sensitivity analysis

A reasonably possible change in foreign exchange rates by 2% would have increased/ (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables in particular interest rates remain constant.

Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates, in cases where the borrowings are measured at fair value through profit or loss. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.

Exposure to interest rate risk

Company’s interest rate risk arises from borrowings. The Company adopts a policy of ensuring that maximum of its interest rate risk exposure is at a fixed rate. The interest rate profile of the Company’s interest-bearing financial instruments as reported to the management of the Company is as follows.

The Company’s interest-bearing financial instruments is reported as alongside:

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 50 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

The risk estimates provided assume a parallel shift of 50 basis points interest rate across all yield curves. This calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date. The period end balances are not necessarily representative of the average debt outstanding during the period.

Credit risk

Credit risk refers to the risk of default on its obligation by the customer/ counter party resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is carrying value of respective financial assets.

Trade receivables and unbilled revenue are typically unsecured and are derived from revenue earned from customers. Credit risk has always been managed by each business segment through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The group uses a provision matrix to compute the expected credit loss allowance for trade receivables and unbilled revenues. The provision matrix takes into account available external and internal credit risk factors such as default risk of industry, credit default swap quotes, credit ratings from international credit rating agencies and historical experience for customers

Credit risk on cash and cash equivalents is limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units, quoted bonds issued by government and quasi government organisations and certificates of deposit which are funds deposited at a bank for a specified time period.

The Company measures the expected credit loss of trade receivables and loan from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.

The aging analysis of the receivable (gross of provision) has been considered from the date the invoice falls due.

Liquidity risk

The company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived. The Company closely monitors its liquidity position and maintains adequate source of funding.

The table below provides details regarding the contractual maturities of significant financial liabilities as of MarcRs.31, 2018:

Impact of hedging activities

The Company uses foreign exchange forward contracts to hedge against the foreign currency risk of highly probable USD/ZAR sales. Such derivative financial instruments are governed by the Company’s policies approved by the Board of Directors, which provide written principles on the use of such instruments consistent with the Company’s risk management strategy. As the value of the derivative instrument generally changes in response to the value of the hedged item, the economic relationship is established.

a) Disclosure of effects of hedge accounting in Company’s balance sheet

The Company did not do hedge accounting in the year ended 31st March 2017.

b) Disclosure of effects of hedge accounting in Company’s statement of profit and loss and other comprehensive income

Hedge effectiveness is determined at the inception of hedge relationship, and through periodic prospective effectiveness assessment to ensure that an economic relationships exists between the hedged item and hedging instruments. It is calculated by comparing changes in fair value of the hedged item, with the changes in fair value of the hedging instrument.

Note 7: Corporate Social Responsibility (CSR) Expenditure

The Company has incurred RS.32.20 Crore (previous year RS.28.25 Crore) towards CSR activities, as per Section 135 of the Companies Act, 2013 and Rules thereon. It is included in other expenses head in the Statement of Profit and Loss. Amount spent on construction/ aquisition of any assets is Nil during the year.

Gross amount required to be spent by the company during the year RS.31.05 Crore (previous year RS.33.38 Crore.)

Note 8:

A. Risk management

The Company’s objectives when managing capital are to safeguard their ability to continue as a going concern so that they can continue to provide returns for shareholders and benefits for other stakeholders, and maintain an optimal structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amounts of dividends paid to shareholders, return capital to shareholders, issue new shares or sell new assets to reduce debt.

Proposed dividend:

The Board of Directors of the Company at its meeting held on 22nd May 2018 has recommended a final dividend of RS.3.00 per equity share (face value of RS.2 each) for the financial year ended 31st March 2018. The same amounts to RS.289.83 Crore including dividend distribution tax.

The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognised as a liability.

Note 9: Exceptional Items

With respect to various notices of demand received from the NPPA, Government of India on account of alleged overcharging in relation to products which are not part of the writ proceedings in the Hon’ble Bombay High Court (refer note 40 B), based on recent correspondence with NPPA and notices received, the Company performed a thorough legal evaluation. Of the total demand received for such products, basis the facts and legal advice, the Company has recorded an additional provision of RS.77.52 Crore in profit or loss for the year ended 31st March, 2018, disclosed as exceptional item. The total provision against these demands is RS.93.94 Crore as of 31st March, 2018..

Note 10: - Other significant notes

(i) The Government of India introduced the Goods and Service Tax (GST) with effect from 1st July 2017 which subsumes excise duty and various other indirect taxes. As required under Ind AS 18, revenue for the year ended 31st March 2018 is reported net of GST. The revenue for year ended 31st March 2018 includes excise duty up to 30th June 2017. Accordingly, income from operations for the year ended 31st March 2018 and 31st March 2017 are not comparable.

(ii) Certain prior year amounts have been reclassified for consistency with the current year presentation. As a result, certain line items have been amended in the financial statements. These reclassifications had no effect on the reported results of operations. Comparative figures have been adjusted to conform to the current year’s presentation.

Note 11: - Authorisation of financial statements

The financial statements for the year ended 31st March, 2018 were approved by the Board of Directors on 22nd May 2018.

Source : Dion Global Solutions Limited
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