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Ortin Laboratories

BSE: 539287|NSE: ORTINLABSS|ISIN: INE749B01012|SECTOR: Pharmaceuticals
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Notes to Accounts Year End : Mar '18

2.9.2 Rights attached to equity shares

The Company has only one class of equity shares having a face value of Rs.10/-each. Each holder of equity share is entitled to one vote per share. In the event of liquidation of the Company, the equity shareholders will be entitled to receive the 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 shareholders.

2.25 First-time adoption of Ind AS

These financial statements, for the year ended 31st March 2018, are the first set of financial statements the Company has prepared in accordance with Indian Accounting Standards(IndASs). For periods up to and including the year ended 31st March 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

The Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31st March 2018, together with the comparative period data as at and for the year ended 31st March 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at 1st April 2016,i.e.,the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1st April 2016 and the financial statements as at and for the year ended 31st March 2017.

Exemptions Applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

The Company adopted not to measure any item of property, plant and equipment at its fair value at the Transition Date. Accordingly, on the transition date, the net carrying value of the property, plant and equipment and intangible assets shall be considered as deemed cost for Ind AS purposes.

Estimates

The estimates at 1st April 2016 and at 31st March 2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items where application of Indian GAAP did not require estimation:

- FVTPL - Quoted equity shares

- Impairment of financial assets based on expected credit loss model (“ECL model”)

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at 1st April 2016, the date of transition to Ind AS and as of 31st March 2017.

Reconciliation of equity as previously reported under Previous GAAP and that computed under Ind AS

FVTPL Financial assets

Under Indian GAAP, the Company accounted for long term investments in quoted equity shares as investment measured at cost less provision for diminution other than temporary diminution in the value of investments, if any. Under IndAS, the Company has designated such investments as FVTPL investments. Ind AS requires FVTPL investments to be measured at fair value. At the date of transition to Ind As, difference between the instruments fair value and Indian GAAP carrying amount has been recognized as a separate component of equity, in the retained earnings.

Trade receivables

Under Ind AS, impairment allowance has been determined based on Expected Loss model (ECL). Due to ECL model, the company impaired its trade receivable by Rs.40.11 Lakhs on 1st April 2016 which has been eliminated against retained earnings. The company impaired its trade receivable by Rs.30.59 Lakhs on 31stMarch 2017, such increase in impairment has been recognized in the profit the loss account for the year ended 31st Match 17.

Sale of goods

Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is included as part of sales in the face of statement of profit and loss. Thus sale of goods under Ind AS for the year ended 31 March 2017 has increased by Rs. 486.66Lakhswith a corresponding increase in other expenses.

2.28 Related Parties

In accordance with the provisions of Ind AS 24 “Related Party Disclosures” and the Companies Act, 2013, Company''s Directors, members of the Company''s Management Council and Company Secretary are considered as Key Management Personnel. List of Key Management Personnel of the Company is as below:

- Mr. S. Murali Krishna Murthy - Managing Director

- Mr. G VenkataRamana - Joint Managing Director

- Mr. S. Mohan Krishna Murthy - Whole Time Director

- Mr. S. BalajiVenkateswarulu - Whole Time Director

- Mr. S. Srinivas Kumar - Whole Time Director

- Bh. SatyanarayanaRaju - Whole Time Director

- Mr. J R K PandurangaRao - Independent Director

- Mr. M. Tippayya - Independent Director

- Mr. K. PradyumnaTeja - Independent Director

- Mr. T. Seshagiri - Independent Director

- Mr. B. Gopala Reddy - Independent Director

- Mrs.LaxmiSravaniDasari - Non Executive Director

- Mr.Bh. SatyanarayanaRaju- CFO

- Mr.SharvariSwapnilShinde-Company Secretary

2.29 Segment Reporting:

The Company concluded that there is only one operating segment i.e Manufacturing of Pharmaceutical products. Hence, the same becomes the reportable segment for the Company. Accordingly, the Company has only one operating and reportable segment, the disclosure requirements specified in paragraphs 22 to 30 are not applicable. Accordingly, the Company shall present entity-wide disclosures enumerated in paragraphs 32, 33 and 34 of Ind AS 108.

2.30 Income Taxes:

a. Income tax expense/ (benefit) recognized in the statement of profit and loss:

Income tax expense/ (benefit) recognized in the statement of profit and loss consists of the following:

2.32 Financial Instruments:

Set out below, is a comparison by class of the carrying amounts and fair value of the financial instruments, other than those with carrying amounts that are reasonable approximations of fair values

2.33 Financial Risk Management:

The Company’s activities expose it to a variety of financial risks, including credit risk, liquidity risk and Market risk. The Company’s risk management assessment and policies and processes are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Board of Directors, risk management committee and the Audit Committee is responsible for overseeing the Company’s risk assessment and management policies and processes.

a. Credit Risk:

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment securities. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of expected losses in respect of trade and other receivables and investments.

Trade Receivables-The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The total trade and other receivables Impairment loss is provided Rs.43.87 lakhs as at 31 March 2018 and Rs.30.59 lakhs at31stMarch 2017.

On account of adoption of Ind AS 109, the Company uses Expected Credit Loss (ECL) model for assessing the impairment loss. For this purpose, it is weighted average of credit losses with the respective risks of default occurring as weights. The credit loss is the difference between all contractual cash flows that are due to an entity as per the contract and all the contractual cash flows that the entity expects to receive, discounted to the effective interest rate.

Financial assets that are neither past due nor impaired - None of the Company''s cash equivalents, including deposits with banks, were past due or impaired as at 31 March 2018.

Liquidity Risks:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company''s reputation.

As of 31 March 2018 and 2017, the Company had unutilized credit limits from banks of NIL and NIL respectively.

As of 31 March 2018, the Company had working capital (current assets less current liabilities) of Rs. 1073.26 lakhs including cash and cash equivalents of Rs.169.22Lakhs and investments in FVTPL financial assets of Rs. 7.84 lakhs .As of 31 March 2017, the Company had working capital of Rs. 772.31 lakhs, including cash and cash equivalents of Rs.143.03 lakhs and investments in FVTPL financial assets of Rs.7.00 Lakhs

The table below provides details regarding the contractual maturities of significant financial liabilities as at 31 March 2018: *Note: The Bank Overdraft and other liabilities are payable on demand.

Market Risks:

Market risk is the risk that changes in market prices such as commodity prices risk, foreign exchange rates and interest rates which will affect the Company’s financial position. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables.

Interest rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

CAPITAL MANAGEMENT

The Company''s objective for capital management is to maximize shareholder wealth, safeguard business continuity and support the growth of the Company. The Company determines the capital management requirement based on annual operating plans and long term and other strategic investment plans. The funding requirements are met through equity, borrowings and operating cash flows required.

2.34 Contingent Liabilities and Commitments:

The following are the details of contingent liabilities and commitments:

Source : Dion Global Solutions Limited
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