Notes to Accounts of Ameya Laboratories Ltd.

Mar 31, 2012

1. COPORATE INFORMATION

Anu's Laboratories Limited is one of the leading manufacturers of 2,4- Dichloro-5 Fluro Acetophenone, CSI Hydroxy Lactum, Chlorohexanone 2-one, Q-acid, Sodium Methoxide solution and powder. Anu's Laboratories Limited has manufacturing facilities at Shad Nagar, Isnapur, Visakapatnam and Pydibhimavaram in Andhra Pradesh.

The financial statements of the Company are prepared on accrual basis.

2.1 Long-term loan from bank: The loan from ING Vysya Bank Limited is secured by way of exclusive first charge on fixed assets of the Company situated at Jawaharlal Nehru Pharma City, Parwada, Vizag. This facility is further secured by way of pari pasu first charge on all other fixed assets of the Company, both present & future, along with other term lenders. The loan is repayable in 12 quarterly installments and the last being October 2014 and carries rate of interest of 16%.

2.2 Long-term loan from others: The loan from IFCI Venture Capital Funds Limited and is secured by way of exclusive first charge on fixed assets of the Company situated at Pydibhimavaram, Srikakulam District, Andhra Pradesh. This facility is secured by way of pledge of shares of promoters of the Company and also guaranteed by the Managing Director of the Company. The loan is repayable in 9 quarterly installments and the last installment being in January 2014 and carries rate of interest of 16%.

2.3 Finance lease obligations are secured against leased assets (Refer Note 13.1).

2.4 Unsecured loan: The long term unsecured loan of Rs.170.00 million from Shri Ram City Union Finance Limited secured against personal property of the promoters and repayable in one year and carrying rate of interest @ 24% p.a.

2.5 The working capital facilities are sanctioned by IDBI, State Bank of India, ING Vysya Bank and Karur Vysya Bank. These facilities are secured by first charge on all the current assets, both present & future. There are further secured by way of second charge on the immovable properties of the Company. These are further secured by way of paripassu first charge on the properties belongs to the promoters & relatives of the promoters and also guaranteed by the Promoter Directors and Directors of the Company. These loans are payable on demand and carry average rate of interest 15% p.a.

3. General description of lease terms

a. Lease rentals are charges on the basis of agreed terms

b. Assets are taken on lease for a period of five years

4. CONTINGENT LIABILITIES

Particulars 2011-12 2010-11

a. Bank guarantees & letter of credit given by banks 11.67 413.98

b. Details of statutory authorities disputed by the Company in appeals with higher authorities in respect of:

Disputed sales tax demands

A.Y. 2001-02 1.00 1.00

A.Y. 2003-04 0.68 0.68

A.Y. 2004-05 1.82 1.82

A.Y. 2005-06 2.21 2.21

c. Other legal claims

M/s. Sun Moon Chemicals Private Limited filled a suit against the Company for a demand of Rs.4.68 million. 4.68 4.68

Total 22.06 424.37

5. SEGMENT REPORTING

a. Company's operations are predominantly related to the manufacture of bulk drugs intermediates, as such there is only one primary reportable segment. Secondary reportable segments are identified taking into account the geographical markets available to the products, the differing risks, returns and internal reporting system.

b. As a part of secondary reporting, revenues are attributed to geographical areas based on the location of customers as detailed below:

6. REGROUPED

Previous year's figures have been regrouped/reclassified wherever necessary, to confirm to the current year classification.

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Mar 31, 2011

1. SEGMENT REPORTING

a. Company's operations are predominantly related to the manufacture of bulk drugs intermediates, as such there is only one primary reportable segment. Secondary reportable segments are identified taking into account the geographical markets available to the products, the differing risks, returns and internal reporting system.

2. Related Party Transactions

Disclosures as required by the Accounting Standard -18 are given below:

a. Name of the related parties and descriptions of relationships

Name Nature of relationship

M/s. Sambasiva Transport Associate

b. Key Managerial Personnel

Mr. K. Hari Babu, Managing Director

Mr. M.S.S.V. Satyanarayana, Wholetime Director

3. Employee Benefits

a. Defined Contribution Plan

The Company's Employee's Provident Fund administered through Government Provident Fund, Employees State Insurance Scheme and labor Welfare Fund are considered as Defined Contribution Plans. The Company's contributions paid/payable towards these defined contributions plan are recognized as expense in the Profit 'and Loss Account during the period in which the employee renders the related service. The provident fund scheme additionally requires the company to guarantee payment of interest at rates notified by the central government from time to time.

The Company has recognized Rs.6.53 million (Previous year: Rs.3.39 million) for provident fund contributions & ESI Contributions in the Profit and Loss Account. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

b. Defined Benefit Plan

Company's liabilities towards gratuity, long term compensated absences are considered as Defined Benefit Plans. The present value of the obligations under such Defined Benefit Plans are determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. Actuarial gains and losses are recognized immediately in the statement of profit and loss. The obligation is measured at the present value of estimated future cash flows using a discount rate that is determined by reference to market yields at the Balance Sheet date on government securities.

4. Disclosure Required by Micro, Small and Medium Enterprises (Development) Act, 2006

In the absence of necessary information relating to the suppliers registered as micro or small enterprises under the Micro, Small and Medium Enterprises (Development) Act, 2006 the Company has not been able to identify such suppliers and the information required under the said Act could not be compiled and disclosed.

5. Contingent Liabilities not provided for

Rs. Million March 31, 2011 March 31, 2010

a. Unexpired bank guarantees 413.99 105.75 & Letters of Credit

b. Demands of statutory authorities disputed by the Company in appeals with higher authorities in respect of

i. Disputed Income Tax A.Y. 2004-05 – 0.27

ii. Disputed Sales Tax demands A.Y. 2001-02 1.00 1.00

A.Y. 2003-04 0.68 0.67

A.Y. 2004-05 1.83 1.83

A.Y. 2005-06 2.21 2.21

c. Other legal claims M/s. Sun Moon Chemicals 4.68 4.68 Private Limited filed a suit against the Company for a demand of Rs.4.68 million.

6. Confirmation of balance

In respect of some of the sundry debtors, creditors, loans, advances & other receivables confirmation of balances yet to be received.

7. A. Production Data

Note: a. Including contract manufacturing and purchases of finished goods.

b. Installed capacity is flexible as the plant is versatile; enabling the Company to produce in different capacities and therefore it varies depending on the product programmed.

D. Earnings in foreign currency

Export of goods on FOB basis Rs.358.73 million (Previous year: Rs.298.68 million).

8. Events subsequent to the date of the Balance Sheet

Pursuant to the amalgamation of Nitya Laboratories Limited, the figures of current year are not strictly comparable to those of the previous year. Previous year's figures have been regrouped/reclassified wherever necessary, to conform to current year classification.

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Mar 31, 2010

1. Contingent liabilities

Contingent liabilities are disclosed after careful examination of the facts and legal aspects of the matter involved.

2. SEGMENT REPORTING

a. Companys operations are predominantly related to the manufacture of bulk drugs intermediates, as such there is only one primary reportable segment. Secondary reportable segments are identified taking into account the geographical markets available to the products, the differing risks, returns and internal reporting system.

3. Related Party Transactions

Disclosures as required by the Accounting Standard -18 are given below:

4. Employee Benefits

a. Defined Contribution Plan

The Companys Employees Provident Fund administered through Government Provident Fund, Employees State Insurance Scheme and Labor Welfare Fund are considered as Defined Contribution Plans. The Companys contributions paid/payable towards these defined contributions plan are recognized as expense in the Profit and Loss Account during the period in which the employee renders the related service. The interest rate payable by the trust to the beneficiaries every year is being notified by the government. The Company has no obligation to make good the shortfall, if any, between the return from the investments and the notified interest rate.

b. Defined Benefit Plan

Companys liabilities towards gratuity are considered as defined benefit plan. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation.

5. Disclosure Required by Micro, Small and Medium Enterprises (Development) Act, 2006

In the absence of necessary information relating to the suppliers registered as Micro or Small enterprises Under the- Micro, Small and Medium Enterprises (Development) Act, 2006, the Company has not been able to Identify such suppliers and the information required under the said Act could not be compiled and disclosed.

6. Deferred Tax

The Company has been recognizing in the financial statements the deferred tax assets/liabilities, in accordance with Accounting Standard 22 - Accounting for Taxes on Income issued by the Institute of Chartered Accountants of India. The position of Deferred Tax Assets and liabilities is as fallows:

7. Confirmation of balance

In respect of some of the sundry debtors, creditors, loans, advances & other receivables confirmation of balances yet to be received.

8. A. Production Data

Installed capacity, actual production

Note: a. Includes contract manufacturing and purchases of finished goods.

b. Installed capacity is flexible as the plant is versatile, enabling the Company to produce in different capacities and therefore it varies depending on the product programmed.

9. Events subsequent to the date of the Balance Sheet

The Board of Directors has approved the merger of M/s. Nitya Laboratories Limited with the Company and the effective date is from April 1, 2009. The Company has filed an application with the Honble High Court for necessary approval. The Honble High Court has admitted the application and called for a meeting of equity shareholders on May 29, 2010 and the process is under progress.

10. Previous years figures have been regrouped and/or rearranged wherever necessary.