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Pfizer

BSE: 500680|NSE: PFIZER|ISIN: INE182A01018|SECTOR: Pharmaceuticals
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Notes to Accounts Year End : Mar '19

1 BACKGROUND

Pfizer Limited, “The Company”, is a Public Limited Company, incorporated under the Indian Companies Act, 1913, having its registered office in Mumbai, Maharashtra and is listed on the BSE Limited and the National Stock Exchange of India Limited. The Company is engaged in manufacturing, marketing, trading and export of pharmaceutical products. The Company has its own manufacturing facility at Goa and Thane. Thane plant is classified as assets held for sale (Refer note 16). The Company has various independent contract / third party manufacturers based across the country. The Company sells its products through independent distributors primarily in India.

2 BASIS OF PREPARATION

a) Statement of compliance

The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 (as amended) notified under section 133 of the Companies Act, 2013 (“the Act”) and other relevant provisions of the Act. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy in use.

b) Functional and presentation currency

These financial statements are presented in Indian Rupee (''), which is also the Company’s functional currency. All amounts have been rounded off to the nearest crore or decimals thereof, unless otherwise indicated.

c) Basis of measurement

The financial statements have been prepared under the historical cost basis except for the following items:

d) Use of estimates and judgements

The preparation of financial statements in conformity with Indian Accounting Standards (Ind AS) requires management to make estimates, judgements and assumptions that affect the application of the accounting policies and the reported amounts of assets, liabilities, income and expenses and the disclosures of contingent liabilities on the date of financial statements. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. Estimates and underlying assumptions are reviewed on an ongoing basis. Application of accounting policies that requires critical accounting estimates involving complex and subjective judgements and the use of assumption in these financial statements have been disclosed in Note 3.

Critical estimates and judgements

Information about estimates and judgements made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is included in the following notes:

Note 4, 5 and 6 — Useful lives of property, plant and equipment, intangible assets, investment property and impairment testing for goodwill

Note 10 — Provision for inventory obsolescence

Note 18 and 23 — Provision for sales return and sales tax/VAT

Note 34 — Assets and obligations relating to employee benefits

Note 35 — Share based payments

Note 37 — Provision for expected credit loss

e) Current and non-current classification

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in Schedule III of the Act. Based on the nature of it’s activities and the time between the acquisition of assets for processing and their realization in cash or cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.

f) Measurement of fair values

A number of accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirely in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

Further information about the assumptions made in measuring fair values is included in the following notes:

Note 3 - Share based payment arrangements Note 5 - Investment property Note 37 - Financial instruments.

Notes:

1. Includes assets recoverable from customers of Rs.1.62 crore (31 March 2018: Rs.0.12 crore)

2. The Company writes down the value of inventories towards slow moving, non-moving, expired and non-saleable inventory based on historical experience of such items and any recent trends that may suggest realizable amount could differ from historical amounts. Charge in the profit or loss on account of write down of inventory during the year is Rs.18.61 crore (31 March 2018: Rs.3.73 crore).

(i) The Company has entered into an agreement (BTA) for sale of business undertaking at Thane on a slump sale basis for a consideration of Rs.178.00 crore, to be paid in installments, subject to fulfillment of the conditions precedent to the closing. The impact of the transaction would be reflected upon closure of the transaction. As on 31 March 2019, the Company had received an advance of Rs.178.00 crore (31 March 2018: Rs.178.00 crore) as per the agreed terms and is disclosed under “Other Current Liabilities” in note 22. Upon the conclusion of the BTA, all remaining workmen at Thane Plant shall be transferred to the buyer so as to facilitate manufacturing operations. The property, plant and equipment pertaining to the plant have been disclosed under this head.

(ii) Office premises not in active use is expected to be disposed in twelve months and accordingly classified as the asset held for sale. Search for a suitable buyer is underway. No impairment loss was recognized on reclassification of the said premises as held for sale and the Company expects the fair value less cost to sell to be higher than carrying amount.

* Amount below '' one lakh

(iv) There has been no movement in the equity shares outstanding at the beginning and end of the year.

(v) The Company has a single class of equity shares. Accordingly all the equity shares rank equally with regards to voting rights, dividends and share in the Company’s residual assets.

(vi) Pursuant to the Scheme of Amalgamation of erstwhile Wyeth Limited with the Company 15,906,292 shares of face value Rs.10 each were issued during the year ended 31 March 2015 to the shareholders of erstwhile Wyeth Limited for consideration other than cash.

(vii) During the five reporting periods immediately preceding the reporting date, no shares have been issued by capitalization of reserves as bonus shares.

4a OTHER EQUITY

Nature and purpose of reserves

(i) Securities premium

Securities premium account is used to record the premium on issue of shares. This reserve is utilized in accordance with the said provisions of The Companies Act, 2013. This account also includes the share premium on shares issued to the shareholders of erstwhile Wyeth limited, pursuant to the Scheme of Amalgamation.

(ii) General reserve

General reserve forms part of the retained earnings and is permitted to be distributed to shareholders as part of dividend.

(iii) Capital reserve

The share-based payment reserve is used to recognize the value of equity settled share-based payments provided to the employees by Pfizer Inc. the ultimate holding company and the Company is not liable for any recharge of the amount. Refer Note no. 35 for further details on the plan.

(iv) Retained earnings

The amount that can be distributed by the Company as dividends to its equity shareholders.

5 PROVISIONS- NON CURRENT

a) Movement in provisions:

b) Nature of provisions:

Provision for sales returns:

This represents provision towards saleable and non-saleable return expected to be made by the customers till the product expiry. Provision towards saleable return represents products which are expected to be returned in saleable condition while non-saleable return represents expected returns of products which are either expired or damaged, such that the sale of such products may not be possible. Management estimate the provision based on historical returns and any recent trends that may suggest future returns could differ from historical amounts.

Provision for demands under DPCO:

This represents provision recognized by the Company towards unsettled compensations claimed under DPCO from the Company.

Provision for customs and central excise:

This represents provision recognized by the Company towards claims raised by Customs and Excise authorities.

The amount represents purchase consideration payable to John Wyeth and Brother Limited, UK for the transfer of its undertaking in India to erstwhile Wyeth Limited. The amount has been retained as an interest free unsecured loan as per the directives of the Reserve Bank of India in this regard pending appropriate clearance from the income tax authorities.

6 TRADE PAYABLES

Notes:

a) Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

b) Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the management.

c) The above includes amounts due to related parties Rs.273.33 crore (31 March 2018: Rs.307.67 crore)

d) All trade payables are ‘current’. The Company’s exposure to currency and liquidity risks related to trade payables is disclosed in note 37.

Provision for sales tax/ VAT

These represents provision recognized by the Company towards claims raised by Sales Tax authorities and VAT authorities as applicable in each state.

Refer note 18 for the nature and basis of the balance provisions.

Sales for the year ended 31 March 2018 includes excise duty up to 30 June 2017 and sales post 1 July 2017 is reported net of Goods and Service Tax.

Set out below is the disaggregation of the revenue and reconciliation to profit and loss account:

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered. Any changes in future taxable income would impact the recoverability of deferred tax assets.

7 EMPLOYEE BENEFITS

(A) Defined contribution plan:

During the year, the Company has contributed Rs.0.46 crore (31 March 2018: Rs.0.51 crore) towards employee’s superannuation fund.

(B) Long-term employee benefit - Compensated absences

All eligible employees can carry forward and avail / encash leave as per Company’s rules.

(C) Defined benefit plan:

(i) Provident fund

The employee’s provident fund is administered by a Trust created specifically for the purpose. The employee’s and employer’s contributions are transferred to the trust. All liabilities arising on account of provident fund payouts on resignation or retirement from service or death while in service are made from the trust.

* The net surplus in the provident fund trust as per the actuarial report is Rs.7.78 crore as at 31 March 2019 leading to a nil liability for the company.

(ii) Gratuity plan

In accordance with the provisions of the Payment of Gratuity Act, 1972, the Company has a defined benefit plan which provides for gratuity payments. The plan provides a lump sum gratuity payment to eligible employees at retirement or termination of their employment. The amounts are based on the respective employee’s last drawn salary and the years of employment with the Company.

Liabilities in respect of the gratuity plan are determined by an actuarial valuation, based upon which the Company makes annual contributions to the Group Gratuity cum Life Assurance Schemes administered by the LIC of India, a funded defined benefit plan for qualifying employees. Trustees administer the contributions made by the Company to the gratuity scheme.

(i) Movement in net defined benefit asset/ (obligation)

The following table shows a reconciliation from the opening balances to the closing balances for net defined benefit (asset) liability and its components

(iv) Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

The sensitivity analysis above has been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

(v) Expected future cash flows

The expected future cash flows in respect of gratuity as at 31 March 2019 were as follows

8 SHARE-BASED PAYMENT ARRANGEMENTS

a) Employee stock options - equity settled

Certain employees of the Company are eligible for stock options, restricted stock units, portfolio performance shares and total shareholder return units granted by Pfizer Inc.

The Company has accounted Rs.8.34 crore (31 March 2018: Rs.7.56 crore) for share-based payment transactions among group entities in accordance with Ind AS 102, ‘Share-based Payments’.

Nature and extent of employee share-based payment plans

Pfizer Inc., as a part of the long-term incentive awards offers certain common stock (shares) to the employees of Pfizer Inc., and its subsidiaries. These shares are offered through grant of awards which is a combination of stock options and restricted stock units under the Pfizer Inc. 2004 Stock plan. As per the plan, the vesting period of the stock options and the restricted stock units is 3 years from the grant date and the stock options have a term of 10 years from the grant date. All stock options and restricted stock units are settled through equity.

The employees of the Company have been issued Nil (31 March 2018: 1,247) share options, 23,251 (31 March 2018: 21,727) restricted stock units, 896 (31 March 2018: 940) portfolio performance shares and 121,001 (31 March 2018: 117,792) total shareholder return units under the Pfizer Inc., 2004 Share Option Plan by Pfizer Inc.

(i) Employee stock options (ESOP)

Employee stock option provides the employees of Pfizer Limited with a right to receive a unit of the stock of Pfizer Inc., at a predetermined exercise price upon fulfillment of vesting conditions.

The weighted average remaining contractual life of the ESOP at the year end is 5.2 years.

The weighted average grant date fair value of stock options granted during the years ended 31 March 2019 is Nil (31 March 2018: US$ 34.06 per option).

(ii) Restricted stock units (RSUs)

RSUs which, when vested entitle the holder to receive a specified number of shares of the Ultimate Holding Company including shares resulting from dividend equivalents paid on such RSUs, are accounted for using a fair value based method at the date of grant. The value of each RSU grant is estimated on the grant date. The fair value based method utilizes the closing price of the Ultimate Holding Company’s common stock on the date of grant. The exercise price of the RSU is Nil.

The weighted average remaining contractual life of the RSUs outstanding at the year end is 1.30 years.

The weighted average grant date fair value of RSUs granted during the year ended 31 March 2019 is US $ 35.74 per RSU (31 March 2018: US $ 34.06 per RSU).

(iii) Portfolio performance shares (PPSs)

PPSs provide an opportunity to receive shares of Pfizer common stock contingent upon the company’s achievement of pre set goals related to long term pipeline portfolio delivery over a five year performance period.

The weighted average remaining contractual life of the PPSs outstanding at the year end is 3.0 years.

The weighted average grant date fair value of PPSs option granted during the years ended 31 March 2019 is US .74 per PPS (31 March 2018: US .06 per PPS).

(iv) Total Shareholder Return Units (TSRUs)

TSRUs are awarded to senior and other key management, and, beginning in 2016, to certain other employees. TSRUs entitle the holders to receive a number of shares of our common stock with a value equal to the difference between the defined settlement price and the grant price, plus the dividends accumulated during the five-year or seven-year term, if and to the extent the total value is positive.

We measure the value of TSRU grants as of the grant date using a Monte Carlo simulation model. The values determined through this fair value methodology generally are amortized on a straight-line basis over the vesting term.

The weighted average remaining contractual life of the TSRUs outstanding at the year end is 4.7 years.

The weighted average grant date fair value of TSRUs granted during the year ended 31 March 2019 is US $ 35.74 per TSRU (31 March 2018: US $ 34.06 per TSRU)

b) Valuation of stock options

The fair value of stock options granted during the period has been measured using the Black-Scholes-Merton option pricing model at the date of the grant. The Black-Scholes-Merton option-pricing model. includes assumptions regarding dividend yields, expected volatility, expected terms and risk free interest rates. The key inputs and assumptions used are as follows:

Share price: The closing price on NYSE as on the date of grant has been considered for valuing the options granted.

Exercise price: Exercise Price is the market price or face value or such other price as determined by the Pfizer Inc.’s Remuneration and Compensation Committee.

Expected volatility: The historical volatility of the stock till the date of grant has been considered to calculate the fair value of the options.

Expected option life: Expected life of option is the period for which the Company expects the options to be live. The minimum life of a stock option is the minimum period before which the options cannot be exercised and the maximum life is the period after which the options cannot be exercised.

Expected dividends: Expected dividend yield has been calculated as an average of dividend yields for the four financial years preceding the date of the grant.

Risk free interest rate: The risk free interest rate on the date of grant considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero coupon yield curve for Government Securities.

These assumptions reflect management’s best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside of the Company’s control. As a result, if other assumptions had been used in the current period, stock-based compensation expense could have been materially impacted. Further, if management uses different assumptions in future periods, stock based compensation expense could be materially impacted in future years. The estimated fair value of stock options is charged to income on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards. The weighted average inputs used in computing the fair value of options granted were as follows:

9 LEASES

Operating leases Leases as lessee

The Company has taken certain facilities under operating lease arrangements. The lease can be terminated at the option of either parties by giving due notice. The rental expenses under operating leases “Other expenses” in the profit or loss.

10 FINANCIAL INSTRUMENTS

1. Financial instruments - Fair values and measurements Accounting classification and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities as at 31 March 2019, including their levels are presented below. It does not include the fair value information for financial assets and financial liabilities not measured at fair value if their carrying amount is a reasonable approximation of fair value.

The following table shows the carrying amounts and fair values of financial assets and financial liabilities as at 31 March 2018, including their levels are presented below. It does not include the fair value information for financial assets and financial liabilities not measured at fair value if their carrying amount is a reasonable approximation of fair value.

2. Financial risk management - objective and policies

(i) Financial risk management framework

The Company has exposure to the following risks arising from financial instruments:

- Credit risk

- Liquidity risk

- Market risk

- Currency risk

The Company’s Board of Directors have overall responsibility for the establishment and oversight of the Company’s risk management framework.

The Company’s risk management is carried out by the management in consultation with the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific risk areas.

The Audit Committee oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and adhoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

(ii) 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 from its financing activities including deposits with banks and other financial instruments. The Company establishes an allowance for expected credit loss and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.

a) Trade and other receivables

The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs.171.66 crore as at 31 March 2019 (31 March 2018: Rs.154.80 crore).

Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India.

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, the country and the state 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.

b) Expected credit loss assessment for customers

The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgement.

Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. The company provided for expected credit loss based on lifetime expected credit loss. (simplified approach).

The movement in the allowance for credit loss in respect of trade and other receivables during the year was as follows

c) Cash and bank balances

The Company held cash and bank balances of Rs.1,914.34 crore as at 31 March 2019 (31 March 2018: Rs.1,771.86 crore). Credit risk on cash and bank balances is limited as these are generally held or invested in deposits with banks with good credit ratings.

d) Investments

There are no significant investments made by the Company and hence credit risk is not material.

(iii) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s principal sources of liquidity are cash and bank balances and the cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements.

Exposure to liquidity risk

Undiscounted contractual maturities of significant financial liabilities

(iv) Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables. We are exposed to market risk primarily related to foreign exchange rate risk. Thus, our exposure to market risk is a function of revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.

(v) Currency risk

The Company is exposed to currency risk on account of its operations. The functional currency of the Company is Indian Rupee. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may continue to fluctuate in the future.

Every percentage point depreciation / appreciation in the exchange rate between the Indian Rupee and US dollar would not have a significant impact on profit or loss for the year ended 31 March 2019.

11 CAPITAL MANAGEMENT

a) Risk management

The Company’s policy is to maintain a strong capital base to sustain future development of the business.

The Company has adequate cash and bank balances and continues to remain debt-free. The Company monitors its capital by a careful scrutiny of the cash and bank balances, and a regular assessment of any debt requirements. In the absence of any debt, the maintenance of debt equity ratio etc. may not be of any relevance to the Company.

b) Dividend

(i) Equity Shares

Final Dividend for the year ended 31 March 2018 of Rs.20 for fully paid share (31 March 2017: Rs.20 for fully paid share). Dividend distribution tax on final dividend for March 2018 Rs.18.81crore (31 March 2017: Rs.18.62 crore).

(ii) Dividend not recognized at the end of reporting period Rs.102.94 crore

Board of directors have recommended final dividend of Rs.22.50 per fully paid share for the year ended 31 March 2019. This proposed dividend is subject to the approval of the shareholders in the annual general meeting.

12 PRICING LITIGATIONS - CONTINGENCIES

The government had raised certain pricing related demands on Pfizer Limited and the erstwhile Parke-Davis (India) Ltd., Pharmacia Healthcare Limited and Wyeth Limited (which entities merged with Pfizer Limited), in respect of certain price fixation orders and other allied matters under various Drug (Prices Control) Orders (DPCO), viz., DPCO 1979, DPCO 1987, DPCO 1995 and DPCO 2013. These demands include alleged differential price demand on procurement of bulk drugs below the notified price, disputes on categorization of products, overcharging on the allegation of not following certain price control orders, allegation of delayed implementation of price ceiling notifications, etc. The Company had repudiated these demands and initiated legal proceedings to defend the Company against these alleged demands. Based on the legal assessment of these matters, certain provisions have already been made in the books, wherever necessary. The Company also has made certain deposits against these demands pursuant to directions from High Court(s).

Based on the legal opinion received by the Company and the assessment of the management, the Company is of the view that no further provisions are considered necessary over and above the sum of Rs.20.81 crore (31 March 2018, Rs.22.03 crore) and that the estimated liability in respect of these cases shall not exceed the amount provided in the books of accounts. A summary of the alleged pricing demands are given hereunder:

13 RELATED PARTY TRANSACTIONS

I. Names of related parties and description of relationships

A. Parties where control exists:

Ultimate holding company:

Pfizer Inc., USA

B. Companies collectively exercising significant influence:

Pfizer East India B.V., Netherlands Wyeth LLC, USA

Wyeth Holdings Corporation, USA John Wyeth & Brother Limited, UK Warner - Lambert Company, LLC, USA Parke - Davis & Company, LLC, USA Pharmacia Corporation, USA

[Collectively holding 63.92% of the aggregate of equity share capital of the Company]

C. Fellow subsidiaries with whom transactions have taken place during the year

Pfizer Products India Private Limited, India Pfizer Innovative Supply Point Intl BVBA, Belgium Pfizer Service Company BVBA, Belgium Pfizer Worldwide Services, Ireland

D. Key managerial personnel

Mr. S. Sridhar - Managing Director

Mr. Milind Patil - Chief Financial Officer (w.e.f 16 August 2018) Wholetime Director (w.e.f 14 November 2018)

Mr. Vivek Dhariwal - Wholetime Director

Dr. Anurita Majumdar - Wholetime Director (upto 8 March 2019)

Mr. R A Shah - Independent Director

Mr. Pradip Shah - Independent Director

Mr. Uday Khanna - Independent Director

Mr. Sunil Lalbhai - Independent Director

Ms.Meena Ganesh - Independent Director ( w.e.f 8 March 2019)

Mr. Ravi Prakash Bhagavathula - Chief Financial Officer (upto 31 March 2018) Wholetime Director (upto 28 February 2018) Mr. Akhilesh Iyer - Relative of Key Managerial Person (w.e.f 20 February 2019)

14 SALES TAX/VAT LITIGATIONS - CONTINGENCIES

The Company has outstanding litigations pertaining to Sales Tax/Value Added Tax of various assessment years which the Company has challenged at various forums. These litigations pertain to non-submission of documentary evidence at the time of assessment, litigations involving question of law and certain disallowance made by authorities in assessment orders. Based on the external consultants advise, the Company is of the view that no further provisions are considered necessary over and above the amount already provided in the books of accounts (Refer note 23). Against these bank guarantee of Rs.21.1 crore has been issued to government authorities.

15 OTHER CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

(i) Contingent liabilities*

* Management considers the service tax, duty of excise, duty of customs and Income tax demands received from the authorities as not tenable against the Company, and therefore no provision for these tax contingencies has been made.

(ii) Commitments

(iii) Contingent liability relating to determination of provident fund liability, based on a recent judgement from Hon’ble Supreme Court, is not determinable at present, due to uncertainty on the impact of the judgement in absence of further clarification relating to applicability. The Company will continue to assess any further developments in this matter for their implications on financial statements, if any, which, based on the number of employees, is not expected to be significant.

16 SEGMENT REPORTING

The Company has only one segment which is Pharmaceuticals and primarily operates in domestic market. The Managing Director of the Company has been identified as the Chief Operating Decision Maker. The Company’s Managing Director, reviews the operating performance of the Company as a whole on a periodic basis. Therefore disclosure relating to segments is not applicable and accordingly not made.

There are no non-current assets outside of India as at 31 March 2019 (31 March 2018: Nil).

17 SUBSEQUENT EVENTS

There are no significant subsequent events that would require adjustments or disclosures in the financial statements as on the reporting date.

18 CORPORATE SOCIAL RESPONSIBILITY (CSR)

As per Section 135 of the Companies Act, 2013, (“the Act”) a Company, meeting the applicability threshold, need to spend at least 2% of its average net profit for the immediately preceding three financial years on CSR activities. The areas for CSR activities are education of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the Company as per the Act.

The gross amount required to be spent by the Company during the year is Rs.10.48 crore. The details of the amounts spent during the year on CSR activities are as follows

Source : Dion Global Solutions Limited
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